Panay Electric Co. Inc., or Peco, will officially cede control of the electricity distribution in Iloilo City on January 18 to either the government or MORE Electric and Power Corp. of businessman Enrique Razon Jr.
Either way, the Cacho family will lose the business with PECO reduced to a shell company with no tangible assets to hold on after the Senate public services committee, chaired by Senator Grace Poe, in November voted unanimously in favor of House Bill No. 8132 granting MORE the franchise to operate a distribution system in Iloilo City.
A number of key industry players, however, may provide a twist and cause a series of corporate maneuvers that could complicate the identity of MORE as franchise holder.
Some analysts say Mr. Razon will likely use MORE and his Prime Metroline Holdings Inc. in the possible takeover of PECO to preserve the latter’s electricity distribution assets and prevent a disruption of power services in Iloilo City. In such a case, Mr. Razon will inevitably sit down with the Lopez Group that controls 30 percent of PECO.
The Lopez Group is playing coy so far in the word word war between the Cacho family, which controls 70 percent of the Iloilo power distributor. But a source said the Lopez Group could soon be an active go-between for the Cachos and Mr. Razon to pave the way for a smooth takeover. Many things could happen in these negotiations, depending on the tack Mr. Razon will take.
For one, Mr. Razon may resort to flipping MORE for quick profit. He can quickly sell MORE to an interested party, including the Lopezes and the Cachos, or even the Aboitiz Group. Mr. Razon’s Monte Oro Grid Resources Corp. back in 2010 sold its 30-percent stake in National Grid Corp. of the Philippines to OneTaipan Holdings Corp. of Henry Sy Jr., after his group just won the franchise to operate the government’s nationwide power transmission system.
The interest of the Lopez Group in keeping a stake in the Iloilo electricity distribution business is understandable. First Philippine Holdings Corp. of the Lopez Group in 1996 purchased 30 percent of the capital stock of PECO in exchange for a stake in Panay Power Corp., which operates a 72-MW diesel plant in Iloilo City. Iloilo City and the province are the bailiwick of the Lopezes and they surely want to join the city’s current economic boom.
The Cachos led by president Luis Miguel Cacho and chairman Mariano Cacho Jr., meanwhile, will have to agree on a buyout of the family’s 70-percent stake in PECO, unless they can get an ally with the financial muscle and offer Mr. Razon a price he cannot resist.
The power standoff in Iloilo City, one way or another, will be resolved through a series of corporate maneuvers that will hopefully result in a win-win solution
The Department of Energy earlier warned that it would take over the operations of PECO if it refuses to turn over its distribution facilities to MORE.
The DoE, according to Energy Secretary Alfonso Cusi, had formed a task force with the National Electrification Administration to take over PECO’s facilities and operations in case the company refuses to implement a transition plan.
Mr. Razon has minced no words in slamming PECO and its alleged poor electricity services in the central Visayan city. He criticized PECO for alleged inefficiencies that paved the way for his company MORE to apply for the franchise to distribute electricity in Iloilo City.
“Four generations of Ilonggos have suffered under PECO. Neither are they heard by PECO, who has not addressed the many pending complaints–numbering 1,800″•against it… Clearly, it is time that the Ilonggos are relieved of their misery,” Razon, who also chairs port operator International Container Terminal Services Inc., said.
Razon got into the new business through Apex Mining Co. Inc., which owns Monte Oro Resources and Energy Inc., later renamed MORE Electric and Power Corp. Razon’s Prime Metroline, which owns Bloomberry Resorts Corp., subscribed to 2 billion shares of Monte Oro. Prime Metroline is now the single biggest stockholder of Apex.
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