Enrique Razon buys 25% stake in Duterte pet peeve Manila Water
MANILA, Philippines — Ayala-led Manila Water Company Inc. announced Monday that ports and casino tycoon Enrique Razon acquired a 25-percent stake in the embattled utility company, which has been on the receiving end of President Rodrigo Duterte’s attacks and threats.
Duterte has berated both Manila Water and Maynilad Water Services Inc. after a Singapore-based arbitration panel ordered the Philippine government to indemnify the two water providers for losses they suffered from an unenforced rate hike.
The president accused both companies of having government contracts with “onerous” provisions that are disadvantageous to the public and threatened to terminate their concession deals, sending their shares tumbling. The concessionaires have since dropped more than P10 billion in compensation claims from the government.
In a regulatory filing, Manila Water said Razon-led infrastructure company Prime Metroline Holdings Inc. bought 820 million common shares of the water firm at a price of P13 apiece. Ayala Corp. remains a shareholder with a 38.6% stake.
The transaction will infuse P10.7 billion in additional equity capital to Manila Water to support its expansion plans and “growth initiatives.”
“Our partnership with the Razon group will result in clear synergies to achieve Manila Water’s long-term goal of providing sustainable water and wastewater services to our customers in the East Zone of Metro Manila and in the other markets we serve,” Manila Water Chairman Fernando Zobel de Ayala said.
“Our partnership combines our respective technical and management expertise. Looking beyond our domestic businesses, the extensive global experience of Mr. Razon through his port operations opens more opportunities for Manila Water to serve new markets,” Ayala added.
Manila Water on Monday suspended the trading of its shares while its parent Ayala Corp. climbed 0.96% as of 9:53 a.m.
Government warns of state takeover
The Metropolitan Waterworks and Sewerage System, the Philippines’ water regulator, has rescinded the 15-year extension of the water concession deals, derailing the two utilities’ long-term plans.
Malacañang last month warned both Manynilad and Manila Water that the government will take over the water sector and jail those involved in the crafting of the present contracts should the two firms reject the new agreements.
According to a report by The STAR, “talks” between the Ayalas and Razon began late last year when Duterte started fuming over the P7.4-billion arbitral award that Manila Water won.
Another industry source of The STAR said Manila Water is having problems in paying its maturing loans.
“We are confident that our collective experience, technical capabilities, and corporate synergies will be of great benefit to Manila Water, the people it serves, and its other stakeholders,” Razon said of the deal.
Business leaders have warned that moves against the two water companies could spook investors at a time Duterte seeks more private capital to bankroll his ambitious infrastructure plan.