An associate commissioner of the Securities and Exchange Commission (SEC) and a director of the Philippine Stock Exchange believes Metro Pacific Investments Corporation should undertake a tender offer for all the shares of Manila Electric Company (Meralco).

In a chance interview, SEC commissioner Juanita Cueto said it is her “personal opinion” that MPIC should make a tender offer after agreeing to buy more Meralco shares amounting to 6.7 percent of the utility.

“But I don’t want to pre-empt the commission since we are a collegial body,” Cueto clarified.

Cueto also pointed out that the SEC has yet to step into the issue since they have to wait for an investor or shareholder of Meralco to file a complaint against MPIC.

But, she said “our staff is already putting together all the disclosures to aid the commission (in the deciding on the issue assuming somebody files a petition).”

For her part, PSE director Vivian Yuchengco said her “personal observation is that MPIC’s loan is a way to go around the (tender offer) rule… don’t do this to the public. The public has been supportive of them (MPIC).”

The Government Service Insurance System (GSIS) has made a formal demand to MPIC to undertake a tender offer for the pension fund’s Meralco shares at the same premium it had agreed to buy First Philippine Holdings Corporation’s Meralco shares.

MPIC had extended an P11.2-billion loan to FPHC as part of the deal to acquire 6.7 percent of Meralco. In exchange, FPHC granted MPIC a call option to pay for the shares by March 2010.

Prior to this, MPIC acquired 14.7 percent of Meralco from affiliates Philippine Long Distance and Telephone Company’s Beneficial Trust Fund and units of parent company First Pacific Company.

PLDT subsdidiary Pilipino Telephone Corporation has also acquired a 20 percent stake in Meralco from FPHC which gave the MPIC group the right to match any offer to buy FPHC’s remaining 13.4 percent interest in the utility.
GSIS chief legal counsel Estrella Elamparo threatened that if MPIC fails to make a tender offer for Meralco shares, “GSIS will be constrained to pursue all civil, criminal and administrative remedies, as may be available, to protect its interests as a shareholder of Meralco.”

She noted that MPIC’s recent acquisition of 6.7 percent of FPHC in Meralco brought up the group’s shareholdings in Meralco to more than 35 percent within a 12-month period.

“While the transaction was disguised as a loan coupled with a call option over the Meralco shares, such artifice was obviously resorted to for the sole purpose of circumventing the tender offer requirement of the law,” Elamparo said.

MPIC defended its refusal to make a tender offer for shares of Meralco noting that some of its purchases were exempted transactions while it has yet to conclude a recent agreement to buy more shares.