Home PEx News and Tech Local and Foreign Issues

Lopezes keep Meralco

http://business.inquirer.net/money/breakingnews/view/20080527-139188/UPDATE-4-Lopezes-keep-Meralco


Lopezes keep Meralco

Garcia of GSIS vows it's not over


By Abigail L. Ho
Reuters, Philippine Daily Inquirer
First Posted 22:16:00 05/27/2008


MANILA, Philippines --Winston Garcia had one card left, played it and lost. At least for now. Manuel Lopez did not blink and won. At least for now.

At the end of a dramatic, daylong corporate battle on Tuesday, Lopez remained in control of Manila Electric Co. which he heads as chairman.

Garcia, president and general manager of the Government Service Insurance System (GSIS), vowed during the rowdy annual meeting of Meralco stockholders to pursue his bid to oust Lopez in court.

Nearly 14 hours after the meeting began, results showed that Meralco retained its five seats and the government four. The two others were independent directors Artemio Panganiban and Vicente Panlilio.

Aside from Lopez, the Meralco directors elected were Meralco president Jesus Francisco, Felipe Alfonso, Christian Monsod and Cesar Virata.

The government board members elected aside from Garcia were Bernardino Abes, Daisy Arce and Jeremy Parulan.

There were 14 nominations for the 11-person board. Canvassing for the votes Ernst & Young’s local partner, SGV & Co., took around seven hours.

"I feel great because we won and that is how it should be," said Oscar Lopez, chairman of First Philippine Holdings Corp, a holding firm of the Lopez family, which owns 33 percent of Meralco.

"It was a diabolical plan of Winston," he told Reuters.

Armed with a "cease-and-desist order" from the Securities and Exchange Commission (SEC), Garcia had sought to stop the counting of proxy votes, accusing the Lopezes of "rigging" the process.

"They have a valid complaint lodged with the SEC challenging the proxies solicited by certain members," Hubert Guevara, a director of compliance and enforcement at the SEC, told reporters.

The move disrupted the meeting, but after an hour and a half of consultations by the Meralco board, assistant corporate secretary Anthony Rosete announced that the SEC order was "null and void."

He said the SEC order did not carry a docket number to show when it was filed and officially received, had no official seal and was only signed by an officer in charge and not by the entire commission sitting en banc.

"This is the last recourse to stop the election," said Oscar Lopez, chair of First Philippine Holdings Corp., flagship firm of the Lopez family, which owns 33 percent of Meralco and controls the utility.

The family patriarch said Garcia's move was a "low blow" because the GSIS chief even wanted to invalidate the Lopezes' ballots.

True to form, the atmosphere at Meralco Theater was charged with electricity—none of which came from any of the distribution utility's power lines.

Hours before the 9 a.m. meeting, the Meralco compound was already crawling with people, many of them employees who also held shares in the company.

In the hour leading to the start of the meeting, lines of stockholders snaked in front of designated registration tables in the Meralco main building lobby, eager to take part in what could be a battle royal between Garcia and the Meralco management.

Most of the members of the current Meralco board occupied the front row of the center aisle seats, with Lopez and Garcia conspicuously ignoring each other despite their adjacent seats.

An unexpected twist came immediately after the opening ceremonies when Guevara stepped up to one of the microphones and read the order seeking to prevent the counting of the votes of six Meralco shareholders plus those of the proxies solicited in their name.

During the recess that followed the announcement of the SEC order, Garcia told reporters that the Lopez family and its allies in Meralco were "trying to put in manufactured proxies."

"They never sent us the list of the validated proxies and the total number of votes. Management solicited proxies without regard to certain rules and regulations that should have been followed. They haven't been very transparent," he said.

"We're very apprehensive of what will happen here. They're trying to put in illegal proxies. These meetings usually have an attendance of just 70-75 percent (of shareholders), but now we have around 86 percent and an unusually high number of proxies," Garcia added.

He said Meralco management should have relinquished control of the stockholders meeting and let the SEC assume jurisdiction over it, including the election for the new board of directors.

Not to be deterred, Rosete and the incumbent board members came out of a conference with their lawyers armed with a statement that obviously shocked both Garcia and Guevara.

"After a review of the order, we deem such order null and void," Rosete said, pointing out 10 reasons for this conclusion.

He said the order did not have a docket number, date and the official seal of the SEC. It was also signed by just one commissioner, Jesus Martinez.

"Upon verification, we have received information that this order was issued without the benefit of a commission meeting, and that we are not aware of any complaint filed with the Compliance and Enforcement Division of the SEC," Rosete said.

He added that Martinez, although designated officer in charge in the absence of SEC Chair Fe Barin, had "no authority to issue this order on his own."

The fact that Martinez was the only signatory to the order, Rosete said, made it violative of due process as Martinez, in effect, "predetermined the validity of the GSIS proxies without proper investigation."

Rosete said neither Meralco nor any of its directors were not given notice of the order, denying them the opportunity to be heard—another violation of due process.

Also, since the matter between the GSIS and the Lopezes of Meralco was an intra-corporate matter, the regular courts and not the SEC had jurisdiction over it, he said.

He also said the GSIS was guilty of forum shopping as it also filed a similar complaint with the Pasay City Regional Trial Court. A GSIS lawyer later said that the move before the court was subsequently dropped.

Rosete then declared that Meralco would push through with the election despite the SEC order.

While the SEC noted Meralco's objections to its order, Guevara said the company's lawyers should look more closely at the Securities Regulation Code, particularly at the rules on proxy validation.

"You may proceed with the election, but subject to the decision of the SEC at a later date," he said.

Garcia stood up, grabbed a microphone and called the meeting "bogus," as it was held "in defiance of an SEC order."

In a press conference later, Meralco regulatory management head Monico Jacob said pushing through with the election was "the prudent thing to do so our stockholders will not be kept in limbo."

"It's only defiance (to the SEC order) if it's a valid, lawful order. But since it isn't valid and lawful, this is about protecting the right of the company and of the stockholders."

Asked if the results of Tuesday's election would end all the controversy over who should be at the helm of Meralco, he said: "We're hoping that people will come to their senses and this will settle things. But we're prepared for any eventuality."

Garcia has charged Meralco with inefficiency and a lack of transparency that allowed Meralco to forge "sweetheart deals" with Lopez-owned generating firms resulting in rates he described as the highest in Asia next to Japan.

President Gloria Macapagal-Arroyo's allies in the Senate and the House of Representatives followed suit, threatening to revoke and divide the Meralco franchise covering 60 percent of the nation's power consumers.

Some analysts and commentators say Ms Arroyo instigated the GSIS campaign to silence the Lopez-owned radio-television network ABS-CBN for its hard-hitting stand against government corruption. But Palace officials and Garcia have denied any government involvement in the fight with the Lopezes.

Philippine electricity rates are among the highest in Asia due to expensive deals with private power producers, the country's reliance on imported oil to generate electricity and widespread illegal tapping.

Meralco says it has to pay high prices for power bought from all generating firms, including those belonging to state-run National Power Corp., whose aging facilities mean it costs more to produce energy.

The Lopezes, one of the Philippines' most powerful dynasties, also own two power generation plants and geothermal firm Philippine National Oil Co.-Energy Development Corp.

Meralco shares were unchanged at P63 on Tuesday. The company's stock has dropped nearly 29 percent since late April when GSIS started its moves against management.

Comments

  • this is a victory for MER stockholders. the votes and the attendance showed stockholders of MER do not want winston garcia and the GSIS to manage MER, they want the lopezes to continue. the current management has done an excellent job in earning for the investors and nobody wants to change that.
  • abcxyz wrote: »
    this is a victory for MER stockholders. the votes and the attendance showed stockholders of MER do not want winston garcia and the GSIS to manage MER, they want the lopezes to continue. the current management has done an excellent job in earning for the investors and nobody wants to change that.

    When was the last MER dividend payout?
  • The people don't care a bit even if Lopezes will have Meralco in the next 100 years or so. All we wanted is to lower down electricity rates. The idea of lowering down electricity rates is easily dismissed with their accusation that the move is politically motivated.

    How can it have political color when the government simply wanted to give the people less burden because they are passing the buck to the consumers who should not be burdened with system inefficiencies of the company?

    Well, I still wish that Meralco will now be fair with their electricity charges. But that's wishful thinking with the Lopez group holding the majority of the boards of directors of Meralco.
  • I don't care if the Lopezes get to keep Meralco AS LONG AS ELECTRICITY RATES ARE LOWERED. That's the point that Lopez apologists here keep missing - deliberately, it seems.
  • pianpian PExer
    ^^^Moral bankruptcy hits the fan!
  • MER stockholders, big and small, got involved in yesterday's stockholders meeting. they also showed their displeasure against winston garcia. winston garcia has caused the deterioration of MER stock prices by -27% since the hostile take over.
    When smallest to biggest owners become electric


    By Ronnel Domingo, Abigail L. Ho, Daxim Lucas
    Philippine Daily Inquirer
    First Posted 04:04:00 05/28/2008


    MANILA, Philippines—It seemed so unlike past meetings of the stockholders of the country’s biggest power distributor.

    Even the smallest owners of Manila Electric Co. (Meralco), who had not attended such meetings before, came. Members of the police SWAT team, with their guns and their bomb-sniffing dogs, were also around.
  • teetotaler wrote: »
    The people don't care a bit even if Lopezes will have Meralco in the next 100 years or so. All we wanted is to lower down electricity rates. The idea of lowering down electricity rates is easily dismissed with their accusation that the move is politically motivated.

    boogeyman wrote: »
    I don't care if the Lopezes get to keep Meralco AS LONG AS ELECTRICITY RATES ARE LOWERED. That's the point that Lopez apologists here keep missing - deliberately, it seems.



    lower power rates? then do the following and not just persecute and do a hostile take over of meralco:

    abcxyz wrote: »
    if the objective is to lower rates, then this is the solution:

    look into the whole system, from the NAPOCOR, MERALCO, IPPs, ERC and EPIRA, including taxes and royalties. correct everything wrong, and punish anyone or any group found to have committed a wrong doing or anything illegal. let the axe fall where it may.

    that includes

    > look at meralco operations and sytems and change to improve costs and efficiences. immediately execute refunds on wrong charges.

    > revise laws (EPIRA and Republic 7832 also known as the Anti-Electricity and Electrical Transmission Lines/Materials Pilferage of 1994). opposition senator legarda has files a bill on this.

    > revamping the ERC - change heads, make ERC decide on pending cases, make them do their job and mandate of regulating the power industry

    > look at NAPOCOR charges and costs. inbclude operating expenses and management of NAPOCOR.

    > IPPs - review and revise contracts, look for inefficiences and reduce cost

    > Royalties and taxes - get the govt to reduce these on all items, specially on indigenous power which is heavy on these things. reducing these will encourage further and new investments on power.
  • giovannni wrote: »
    When was the last MER dividend payout?

    last div was P0.50/share record date as of april 16, 2008. phil stock market as a whole is not so much a dividend play.
  • The Lopezes' got to go!

    Masyado silang matatakaw at garapal. Pahirap sila sa mamayang ng Pilipinas. Pati kuryenteng ginagamit nila gusto nila ang consumer ang magbayad.

    Lopezes' OUT!
Sign In or Register to comment.