Arroyo, Aboitiz, and Garcia’s Power Play

Written on Friday, May 23rd, 2008 at 9:56 am | by Patricio Mangubat

Former Supreme Court Justice Jose Vitug just resigned as management consultant of Meralco. In an interview, Vitug said that he resigned due to a misunderstanding with GSIS President and Board director Winston Garcia. This is the latest in a string of power plays that both sides—the Lopezes and the government— are doing prior to the expected fireworks on May 27.

What do these all mean?

If you look at the stock index of Meralco, you’ll see a noticeable slide in the price since news broke out of government bid to buyout the Lopez stake at the utility firm. (check out the Philippine Stock Exchange website at http://www.pse.com.ph) Obviously, both sides are encouraging their allies to buy the stocks now at a lower price since after the stockholder’s meeting, expect a spike in the index. Both sides are strengthening their positions and the only way to do that is to further consolidate their individual holdings and attract independent stockholders to their groups. At this early, both groups know where they stand and where they could potentially affect the position of the other group. Observe that there’s a noticeable decrease in the volume of news about Meralco, suggesting that both sides are clinging to their cards very close to their chests.

The demand for transparency and attacks against Meralco management are meant to dilute the shares of the firm for a possible corporate takeover. This is not an issue of lowering electricity rates, says energy technocrat Dr. Franciso Viray. “Because at the end of the day,” says Viray, “..whoever wins will still take care of the interests of the stakeholders.” And who would benefit from a diluted share?

Quarters believe it is a ploy of the Aboitizes, the main competitor of the Lopezes in the power sector, with the help of Garcia, to puncture the strong hold of the family in the utility firm. This is their moment. Without Arroyo’s backing and the strong financial position of GSIS, Aboitiz cannot possibly enter Meralco. There’s no way that the Aboitiz Group can do that without Arroyo in power.

Arroyo’s plan is simple—consolidate all power utilities into one business interest— the Aboitizes—so that they’re assured of a hefty retirement benefit after 2010. Arroyo’s group is not really interested in lowering electricity rates. Far from it. Arroyo’s plan is to reduce the influence of the Lopezes, thereby creating a window to be able to influence other more profitable holdings of the family. The only way to do that is to allow a business ally such as the Aboitizes to use its financial clout.

Personal Take

As an investor of GSIS Kabuhayan Fund, I am not in favor of using my money to back Garcia’s plan. We are being tricked by this corporate raider. People should see beyond the media propaganda and look at the real insidious motive behind these moves. Attacking the Lopezes now is definitely not in the best interests of the Filipino People. If we’re dreaming of a lowered electricity rate, think again. Yes, maybe after May 27, we will see a price adjustment. But, this is not permanent. This will obviously be in the name of propaganda. We, as a people, should put a stop into all these government interventions in private businesses and concentrate on effective governance.

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About The Author: Patricio Mangubat is a pseudonym. It means "country fight". Yet, the one behind this name is real. He can be briefly described as a long-time activist as well as a communication strategist. He blogs at The New Philippine Revolution.

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Comments

3 Responses to “Arroyo, Aboitiz, and Garcia’s Power Play”

  1. TonGuE-tWisTeD on May 23rd, 2008 2:11 pm

    Another topic that is making the rounds in coffee shops is the persistent attempts of another Aboitiz company, 2Go, to buy out the shares of the Delgado family’s flagship, Delbros, from its joint venture with US logistics giant, UPS.

    I don’t know if this is connected to what UPS has been experiencing in their Clark hub - the heart of UPS cargo operations in the whole region. After Intel’s transfer to Vietnam, UPS-Delbros lost a major bulk cargo account. Semicon and the rest of the exporting companies are expected to follow suit since it looks like any reversal in their diminishing profits isn’t happening anytime soon, what with US struggling with its economy. Had UPS sensed that it’s going to be the next target of the insatiable gluttons, they preempted it since they want no part of it?

    It is no surprise therefore, that UPS has announced it is packing up and moving to China. FedEx did the same thing about 2 years ago. They folded up their Subic hub and proceeded to China. With only DHL left, 2Go will dominate the local document and parcel business and maybe, the whole of the presently-robust logistics business. Much earlier William and Gothong Lines also soldout to Aboitiz in WG&A, now Aboitiz Transport. Sea transport is the single biggest cost factor in logistics.

    Tell me, where is Aboitiz getting all this money? Why are their competitors either selling out or moving out? Were they told to “back-off”, too?

  2. Patricio Mangubat on May 23rd, 2008 2:54 pm

    hehehe! probably, that’s what they got from zte? those billions? just today, aboitiz power is investing 23 billion pesos. I thought the aboitizes are bankrupt? look at what happened with their venture with the gothongs.

  3. Lee Angelo on June 11th, 2008 9:09 pm

    Nice article! Yeah, I think so - there’s lots of links between the Aboitizes and GMA. I don’t think that the government is sincere in its effort to cut-down the prizes of electricity. It’s obvious that Malacañang is playing the “good cop” role without the public knowing the real intentions of the palace.

    As the closing time this today, Meralco (MER) closed Php50.00 /share, from its Php54.50 closing price yesterday. Surely, even if the stock price is plunging to its lowest price, there is great amount of trading going on. Three-hundred Eighty-Nine trades happened earlier - 8th Most Actively Traded Stock by Value, even if Meralco has the 2nd highest negative movement (-8.26%), First Phil Holdings being the first (-8.62%). Clearly we can see that Lopez-owned companies are shedding its value. Aboitiz Power’s (AP) current price is 5.40/share. Twenty-Four trades happened for the day. Not much reaction so far since the majority of the public doesn’t know of it yet.

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