Vol. XXII, No. 87 [ BusinessWorld Online ]
Tuesday, November 25, 2008 | MANILA, PHILIPPINES
BY DON GIL K. CARREON
LISTED METRO Pacific Investments Corp. (MPIC) is in talks with a foreign private equity firm so it could raise funds to finance acquisitions next year.
The Pangilinan-led company may issue up to 1.5 billion B shares to a big foreign investor and sell P3 billion worth of common shares to the public to raise between $150 million and $200 million if market conditions improve.
MPIC said it would use the proceeds of the share sale to buy other toll road projects, hospitals and port facilities at the North Harbor in Manila.
MPIC Chairman Manuel V. Pangilinan told reporters on the sidelines of the company’s special stockholders meeting they have yet to finalize the plan to sell more shares to the public.
"Nothing is specific yet. We just want flexibility if at all, because the market [conditions] are very bad," he said.
Mr. Pangilinan added that between the two fund-rasing options, getting big investors is a better option given the volatile stock market.
"The most viable alternative is private investors coming in rather than a public fund raising, so we talked to a number of investors who expressed interest," he said.
MPIC shareholders yesterday approved a company plan to issue P9.55 billion worth of shares to pay off a loan from its parent and finance acquisitions next year.
In a special stockholders meeting, company officials said MPIC would hike its capital by almost 80% to P21.55 billion.
Aside from the foreign investor and public offer, MPIC will also issue 889.04 million common shares worth P2 each to Metro Pacific Holdings, Inc. (MPHI) to pay off its $40-million loan from Hong Kong-based parent First Pacific Co. Ltd.
The company borrowed the money in July to complete its acquisition of UK-based Ashmore Investment Management Ltd.’s 24% interest in DMCI-MPIC Water Co., the parent of MPIC’s water utility arm Maynilad Water Services, Inc.
MPIC will also issue 1.5 billion common shares at P2 each to MPHI to partially fund its acquisition of toll operator First Philippine Infrastructure, Inc. earlier this month.
Local share prices have lost almost half of their value since the year started, as spooked investors scramble to get out of the stock market due to the uncertainty caused by the financial crisis in the US and Europe.
In a telephone interview, market analyst Grace C. Cerdenia, chief operating officer of 2TradeAsia, said it is wise on MPIC’s part to consider the equities market to raise capital. "If they borrow from banks, that may eat a share of their profits because they would have added interest expenses," she said.
She added that while local rates have not necessarily shot up, these have gone up since the US financial crisis started.
Ms.Cerdenia said MPIC’s decision to sell shares would depend on the price of its public offer and the yield from the shares it would sell to the foreign equity firm. Ms. Cerdenia said if conditions worsen, the company may have to borrow from banks.
Mr. Pangilinan said they were also in talks to buy half of Harbour Centre Port Terminal, Inc., MPIC’s partner in the bid to acquire the 25-year concession for the North Harbor.
The acquisition, he said, would avoid a conflict of interest since Harbour Centre also operates a port adjacent to the North Harbor.
In an earlier briefing, MPIC officials said the company would likely post better figures next year as it benefits from the earnings of companies it had acquired.
The MPIC group posted a core net income of P143.3 million in January to September, a turnaround from the year-ago’s loss of P170.6 million.
The company traced the improvement to the performance of Maynilad, Medical Doctors, Inc. and Davao Doctors.
