MPIC is led by Manuel V. Pangilinan, also the chairman of Philippine Long Distance Telephone (PLDT) Company. FPHC chairman and chief executive officer Oscar M. Lopez (OML) said, “We are very happy with the agreement reached with Mr. Pangilinan’s group. It reflects a valuation that shows the strong growth prospects of Meralco. The proceeds, no doubt, will allow FPHC to pursue its new directions and further establish itself in the country as the premier renewable energy provider.” FPHC granted a call option to MPIC on 74.7 million Meralco shares, or approximately 6.7% of the outstanding common shares of the electric utility. The call option shall be issued in due course and shall be exercisable at any time from Jan. 15, 2010 until March 31, 2010.

In the meantime, MPIC gave First Philippine Utilities Corp., a wholly owned FPHC subsidiary, an P11.2 billion short-term loan covered by a promissory note which matures on June 30, 2010. The loan bears an interest rate of 5% per annum and is secured by Meralco and First Gen Corporation shares held.

In a briefing, FPHC vice president, assistant corporate secretary and assistant information officer Rodolfo Waga Jr. said the Meralco shares remaining with the company are of strategic value. FPHC will continue to have representation on the board of Meralco. “In March (2009), the company sold 20% of Meralco at P90 per share or P20.7B. Today (November 2009), the remaining 13.4% has been valued at P300 per share or P44B. So FPHC remains a significant minority in Meralco,” Waga said.

If the call option is exercised, FPHC will continue to be entitled to one seat in Meralco’s 11-member board of directors. The investment and cooperation agreement with MPIC in March 2009 will bind both parties to exercise voting rights as a block to give full effect to the cooperation arrangement in all matters brought to the shareholders.

FPHC intends to pay down a portion of its debt with the proceeds of the loan, as well as fund investments in indigenous and renewable energy through First Gen.