Investors dump PLDT, Meralco stocks
Stock market investors on Monday dumped shares Of Philippine Long Distance Telephone Co. (PLDT), dragging down the market index by 4.7 percent, on concerns that the country’s most valuable company may jack up debts or even tighten future cash dividends with its bold entry into power retailer Manila Electric Co. (Meralco).
Also on Monday, Moody’s Investors Service revised the status of PLDT’s Baa2 local-currency debt issuer rating from review for possible upgrade to review with direction uncertain. Moody’s also affirmed PLDT’s Ba2/positive foreign-currency bond rating.
The rating action has been prompted by PLDT’s recent announcement that it plans to acquire up to a 20-percent stake in Meralco.
“While the acquisition can largely be funded out of cash on hand and without any material adverse impact on PLDT’s consolidated financial metrics, which remain strong for a Baa rating, it will reduce the company’s liquidity reserves,” says Laura Acres, a Moody’s vice president.
PLDT shares fell 11.65 percent to close at P1,895 and accounted for about one-third of the P2.14 billion worth of trades on the stock exchange. On Friday, it announced a P20-billion deal to buy the Lopez clan’s 20-percent stake in Meralco, using its cellular phone unit Pilipino Telephone Corp. (Piltel).
But a bigger loser was Meralco, the erstwhile darling of the market. The utility was down 14.6 percent to close at P79 a share as investors locked in profits on news that the PLDT buy-in deal had been finalized. San Miguel Corp. president Ramon Ang also declared over the weekend that the conglomerate would let the PLDT group run the power retailer, ruling out a new boardroom battle.
Despite the selldown of PLDT, affiliates Piltel and Metro Pacific Investments Corp. — the units that will soon own 30.12 percent or the controlling stake in Meralco — gained 8.11 percent and 7.41 percent, respectively. Piltel benefited from expectations of a tender offer by sister company Smart Communications, which will consolidate all cellular businesses of the PLDT group under its wing.
“Sellers of [PLDT shares] believe that as deep pockets find ways to break the duopoly [in Meralco], PLDT will have to spend more than what management has disclosed so far,” said Eduardo Banaag, vice president at First Metro Investment Corp.
April Lee-Tan, head of research at stockbrokerage Citiseconline, said the market might have viewed the deal negatively for PLDT because the purchase price was expensive while the synergies cited for breaking into the power-distribution business appeared vague for now. Based on the P90-a-share Meralco buy-in price, she estimated that PLDT effectively agreed to pay 32.3-percent higher than fair market value.
Business – Investors dump PLDT, Meralco stocks
Tags: Conglomerate, PLDT, San Miguel Corp, Smart, URC
