MANILA - The Pangilinan-led group in Manila Electric Company (Meralco) is eyeing to increase its ownership stake in the power retailer to near majority.

In a statement to its shareholders, Hong Kong-based First Pacific Company Ltd. said the “The company’s Philippine affiliate, Metro Pacific Investments Corporation (MPIC), has previously stated that it intends to seek to increase its shareholding in Manila Electric Company to not less than a 20% interest.”

If MPIC increases its current 12.96% stake in Meralco to 20%, the First Pacific group will hike its group’s ownership to 40%.

Currently, First Pacific’s aggregate interest in Meralco is at almost 33%. Another Philippine-based unit, Pilipino Telephone Corporation (Piltel), has a 20% stake.

First Pacific added that MPIC “is in discussion with various parties with the intention of achieving that objective. Terms of any such further acquisition have yet to be agreed. If terms are ultimately agreed (of which there are no assurance), the Company would make an appropriate announcement under the Listing Rules at the relevant time.”

The announcement came days after the patriarch of the Lopez family, who founded Meralco, recently hinted that the business clan is mulling to sell its remaining 13.4% stake in the power retailer. (Read: Lopez family eyes geothermal investments abroad; may sell Meralco stake)

If the First Pacific group acquires the stake of the Lopez family lock stock and barrel, it will end up owning over 46% of Meralco.

This was the almost the same level previously stated by the MPIC and sister company Philippine Long Distance Telephone Company (PLDT) a few months ago that the group controls about 48% of the power utility. This also includes the Lopezes, plus other business partners.

Manuel Pangilinan, one of the most influential in Philippine business, is the managing director of First Pacific, and the chairman of MPIC and Philippine Long Distance Telephone Company (PLDT), the parent of Piltel.

Pangilinan and the Lopezes have previously forged an alliance that the group of Pangilinan has the first right to the shares of the Lopezes should the family decide to sell out. (Read: Pangilinan: We have first right to Lopez's stake in Meralco)

The alliance was meant to ward off efforts of another Meralco block shareholder, San Miguel Corporation, which has a direct 27% stake. The diversifying conglomerate’s president and chief executive officer Ramon Ang previously told reporters that it was interested in the stake of the Lopezes, too. (Read: SMC eyes higher stake in Meralco)

Announcement

The statement from First Pacific about the increase in MPIC stake in Meralco to 20% was intended for investors and analysts of the company, which is listed in the Hong Kong Stock Exchange.

First Pacific announced that it was raising at least $282 million through a share rights offer mainly for its ventures in the Philippines, where 80% of its assets are hosted. (Read: First Pacific to raise $282-M for ventures in RP)

Proceeds of the stock rights issue will mainly be used to fund the expansions of Philex Mining Corp, where First Pacific has a direct and controlling stake.

In a press release, First Pacific explained that “With respect to further investments, First Pacific continues to review mining opportunities given that there are significant mining reserves and a more favorable regulatory environment in the Philippines.”

For Meralco, First Pacific said it “intends to acquire further shares in Meralco when opportunities arise.”

PLDT, through Piltel, has completed its P20.1 billion investment in Meralco in July. MPIC, on the other hand, is completing its P18.2 billion cash and shares investment in Meralco by end- October 2009.

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