Pension fund says it has 4%, wants tender offer

MANILA - The Government Service Insurance System (GSIS) may end up back on the board of Manila Electric Co. (Meralco), with the state pension fund’s chief claiming it has again accumulated a stake that could be sold to either of the utility’s largest shareholders or leveraged for a director’s seat.

GSIS President and General Manager Winston F. Garcia, in an interview, said the pension fund had built up a Meralco interest equivalent to 4% after having sold its 27% stake to San Miguel Corp. last year.

With businessman Manuel V. Pangilinan last week having secured a deal that would raise his group’s stake in Meralco to 41.4%, the GSIS -- as a minority shareholder -- should benefit from a mandatory tender offer, Mr. Garcia said.

"We are here to protect our shares and that includes Meralco. If Mr. Pangilinan will not buy our shares, we will go to San Miguel and make the same offer. If they are not interested, we will be the one who will buy the public’s shares, enough for us to give us one board seat," he said.

The pension fund, Mr. Garcia claimed, had the wherewithal to bid for the 10-15% of Meralco held by the public at the same premium price -- P300 per share -- tendered by Mr. Pangilinan when he secured the rights to an additional 6.7% stake from the Lopez family.

Mr. Garcia -- who campaigned to oust the Lopezes from Meralco before suddenly selling to San Miguel -- said another other option being looked into was filing a complaint before the Securities and Exchange Commission (SEC). The structure of last week’s deal, he claimed, means the mandatory tender offer rule will be circumvented.

"All of us know that [Mr. Pangilinan has structured the acquisition] in such a away that he will be able to skirt the mandatory tender offer. Let Mr. Pangilinan be clear what his group plans to do [with respect to minority shareholders]."

The rule states that any individual -- or a group acting in concert -- who acquires a 35% stake in any company within the span of one year must bid for the shares held by the minority at the highest price paid during the past six months.

Mr. Pangilinan first bought a 10% stake in Meralco through Philippine Long Distance Telephone Co.’s (PLDT) beneficial trust fund and other firms from February 3 to March 6, 2009.

The PLDT chairman followed this up by buying an additional 20% stake from the Lopezes -- who were then fending off San Miguel -- a week after and his group’s stake is currently just short of 35%.

"So if Mr. Pangilinan will close his new deal with the Lopezes after March 14, he has already avoided the law," an analyst who requested anonymity said.

Last week Mr. Pangilinan, through Metro Pacific Investments Corp., matched the P300 per share price offered by Henry Sy Jr.’s Triratna Holdings Corp. for the Lopezes’ remaining 13.4% of Meralco.

The deal was seen as giving Mr. Pangilinan’s group an edge over San Miguel, which along with its allies is said to control 43% of the power firm. Mr. Sy is described as allied with the diversifying food and beverage conglomerate.

But instead of an outright purchase, Metro Pacific will first lend the Lopezes’ First Philippine Holdings Corp. P11.2 billion, in effect securing rights over the stake. A call option on the 6.7% will expire on March 31, 2010, with Metro Pacific committing to pay P22.4 billion on top of the P11.2 billion which will remain a loan.

"I think it is unfair for the minority stockholders if Mr. Pangilinan will not do a tender offer," Mr. Garcia said. "The rule is meant to protect the interest of the minority shareholders and let us see what the Philippine Stock Exchange and SEC will do about it."

Mr. Pangilinan or his representatives were not available for comment yesterday.

Following announcement of the deal, Meralco shares lost 12.21% or P27 of its value to settle at P194 on Friday.

Mediaquest Holdings, Inc., a unit of the Beneficial Trust Fund of PLDT, has a minority interest in BusinessWorld. -- K. J. R. Liu