Metro Pacific Investments Corporation has entered into an agreement with First Philippine Holdings Corporation Monday to extend the date of the grant of the Call Option to acquire 6.7 percent of Manila Electric Company to January 29, 2010 from the original January 15, 2010.

First Pacific Company disclosed to the Hong Kong bourse that “the directors of the Company are of the view that the extension allows MPIC and FPHC to have more flexibility with respect to finalizing the set of terms of the Call Option for the benefit of both parties.”

It added that “the terms of the Extension Agreement are fair and reasonable and in the interests of the shareholders of the Company as a whole.”

MPIC is borrowing P12 billion to fund the soft loan it is extending to First Philippine Holdings Corporation as part of the P22.4 billion deal to purchase an additional 6.7 percent in Meralco.

According to MPIC, it will also be paying FPHC a yet undetermined amount for the call option which will allow MPIC to buy more time to raise funds by securing the purchase of the Meralco stake in escrow until March 31, 2010.

The notes will be secured by a pledge over a total of 163.6 million Meralco shares owned by MPIC.

FPHC said MPIC exercised its right of first refusal and matched the TriRatna offer for a Meralco valuation of P300 per share as against the P150 per share MPIC was reported to have initially offered.

Initially, there will be a short-term loan by MPIC to First Holdings (or its wholly-owned subsidiaries) in the amount of approximately P11.20 billion or half of the purchase price for half or 6.7 percent of the 13.4 percent Meralco stake of FPHC.

The Loan will be evidenced by a promissory note and will have an interest of 5 percent per annum.

FPHC will then grant MPIC a Call Option by January 15, 2010 until March 31, 2010 on 74.7 million common shares of Meralco or approximately 6.7 percent of the outstanding common shares of Meralco.

It is expressly stated in the Term Sheet that the rights of MPIC under the Call Option shall be independent of any rights that MPIC may have as lender under the Loan and may be exercised by MPIC at its sole option and discretion without regard to the existence or absence of any default under the Loan.