Metro Manila (CNN Philippines, February 6) — Ayala Corporation has bared plans of ceding control over Manila Water to the group of businessman Enrique Razon, which will get 51 percent voting rights in the embattled utility firm.
The listed conglomerate announced on Thursday that part of Razon’s ₱10.7 billion capital infusion in the water concessionaire includes the grant of proxy rights, which would effectively give the Razon group the biggest voting interest in Manila Water.
Razon, through his firm Prime Metroline Holdings Inc., bought a 25 percent stake in Manila Water. The transaction will be carried out through Razon’s new unit called Trident Water.
Ayala Corporation said its executive committee approved the grant of proxy rights by its unit, Philwater Holdings Company, to Trident Water for preferred shares in order to give Razon’s firm the deciding vote.
With the deal, Ayala’s voting interest would drop to 31.6 percent from 65.95 percent.
“This arrangement aims to strategically rationalize the economic and voting stakes between Ayala and Trident Water as strategic partners in Manila Water,” the firm said in a disclosure.
Ayala added that this would take effect after the acquisition deal is finalized, and upon securing the approval of lenders as well as government regulators.
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Manila Water said on Monday that it will use the fresh funding from Razon “to improve the water and wastewater distribution system” in the east zone of Metro Manila, its service area.
Razon, the fourth-richest in the country according to Forbes, has made a fortune out of operating the container yard at the Port of Manila through his company International Container Terminal Services, Inc. (ICTSI). He has ventured into the water business with his bid to develop Wawa Dam in Rizal.
The deal came in the middle of negotiations for a new concession deals with the national government and President Rodrigo Duterte’s repeated public rants against Manila Water and Maynilad for supposedly onerous supply contracts.
Shares at Manila Water and Ayala Corporation climbed following the news. At the close of trading Thursday, the Ayala share price was 2.15 percent higher from the day before, while Manila Water soared by 9.84 percent to close at ₱14.96. This is higher than the ₱13 per share rate which Razon paid for the stake, but remains well below Manila Water’s peak at ₱18.98 prior to Duterte’s tirades against the water firm.
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Meanwhile, shares in Razon-controlled ICTSI edged higher by 0.31 percent at the end of Thursday’s trading.
