Manila power utility defies regulatory order
Roel Landingin from Manila | Monday, 9 June 2008
Manila Electric Co defied a government order not to count a big block of disputed votes during its annual meeting late last month and elected candidates to its board, adding to an acrimonious spat between the company's two biggest shareholders.
The Philippines' largest power retailer re-elected its chairman, Manolo Lopez, and president, Jesus Francisco, amid protests by the Government Service Insurance System (GSIS), the pension fund for state workers, which blames management for the nation's high electricity charges.
Company officials said the order from the Securities and Exchange Commission (SEC), which sought to stop the Lopez group, a major shareholder, from voting the proxy votes it holds, was "null and void".
GSIS holds about a quarter of Meralco, as the company is known, and the Lopez group has about 33.5 per cent.
The move to proceed with the vote could increase tensions between Meralco and the government, which is pressing the utility to cut electricity rates for the poorer families among its 4.4m residential customers in the capital and surrounding areas. Many government officials blame Meralco, and its deals with Lopez family-owned power companies, in particular, for high electricity rates in the capital.
Strained relations between Meralco and the government have led to a 22 per cent drop in the company's share price since GSIS's president Winston Garcia began openly criticising the company's top officials more than a month ago.
Credit Suisse recently advised investors to sell Meralco shares because the company was unlikely to win regulatory approval to increase electricity rates amid the tense relations with government.
Analysts said political pressures on Meralco to cut rates might hurt the government's power privatisation programme.
The Lopez family, which also owns the country's biggest power producer and its largest television company, retained majority control of the company's 11-person board of directors at the end of an acrimonious shareholders' meeting that lasted almost 14 hours, the longest ever in the company's 105-year history.
But the company risked possible government sanctions for ignoring the SEC order for Meralco to set aside a big number of shareholder votes whose validity is being disputed by the GSIS.
The SEC is preparing to issue a letter asking the company's top officials to explain their decision to ignore the order.
........................................
FT Syndication Service
The Philippines' largest power retailer re-elected its chairman, Manolo Lopez, and president, Jesus Francisco, amid protests by the Government Service Insurance System (GSIS), the pension fund for state workers, which blames management for the nation's high electricity charges.
Company officials said the order from the Securities and Exchange Commission (SEC), which sought to stop the Lopez group, a major shareholder, from voting the proxy votes it holds, was "null and void".
GSIS holds about a quarter of Meralco, as the company is known, and the Lopez group has about 33.5 per cent.
The move to proceed with the vote could increase tensions between Meralco and the government, which is pressing the utility to cut electricity rates for the poorer families among its 4.4m residential customers in the capital and surrounding areas. Many government officials blame Meralco, and its deals with Lopez family-owned power companies, in particular, for high electricity rates in the capital.
Strained relations between Meralco and the government have led to a 22 per cent drop in the company's share price since GSIS's president Winston Garcia began openly criticising the company's top officials more than a month ago.
Credit Suisse recently advised investors to sell Meralco shares because the company was unlikely to win regulatory approval to increase electricity rates amid the tense relations with government.
Analysts said political pressures on Meralco to cut rates might hurt the government's power privatisation programme.
The Lopez family, which also owns the country's biggest power producer and its largest television company, retained majority control of the company's 11-person board of directors at the end of an acrimonious shareholders' meeting that lasted almost 14 hours, the longest ever in the company's 105-year history.
But the company risked possible government sanctions for ignoring the SEC order for Meralco to set aside a big number of shareholder votes whose validity is being disputed by the GSIS.
The SEC is preparing to issue a letter asking the company's top officials to explain their decision to ignore the order.
........................................
FT Syndication Service