Conglomerate Ayala Corp. is granting major voting powers to ports and casino magnate Enrique Razon’s group in Manila Water Co. Inc., following the businessman’s acquisition of a 25% stake in the beleaguered water concessionaire.
In a disclosure to the Philippine Stock Exchange on Thursday, Ayala Corp. announced its executive committee has approved the grant of proxy rights by its wholly-owned unit Philwater Holdings Co. to Trident Water “to enable the latter to achieve 51% voting interest in Manila Water.”
Prime Metroline incorporated Trident Water for the transaction.
The granting of majority voting rights to Razon’s firm is part of the shareholder agreement executed among Ayala Corp., Philwater, and Trident Water.
Philwater owns 4,000,000,000 of preferred shares in Manila Water, representing 65.95% of voting shares in the company.
Upon the grant of proxy rights to Trident Water, Ayala’s effective voting interest in Manila Water will stand at 31.6%.
“The shareholders’ agreement will become effective after the closing of the subscription agreement, which will occur after certain conditions are met, including required lenders’ consent and regulatory approvals,” Ayala Corp. said.
“This arrangement aims to strategically rationalize the economic and voting stakes between Ayala and Trident Water as strategic partners in Manila Water,” the conglomerate said.
Razon’s – the fourth richest man in the Philippines – fresh capital infusion to Manila Water came amidst the ongoing discussions between the government and water concessionaires to craft a new concession agreement, which were earlier deemed by Philippine officials as “onerous.”
The decades-old concession deal between the government and water firm went under scrutiny after both Manila Water and Maynilad scored victory in separate multi-billion peso arbitration cases abroad.
Permanent Court of Arbitration in Singapore has ordered the Philippine government to pay Maynilad around P3.4 billion and Manila Water P7.39 billion as compensation for losses or damages as spelled out under the liability clause.
Duterte, however, railed against the agreements which prohibit any government interference in rate-setting and provide an indemnity clause in case of such interference.
But the companies said last December that they were no longer pursuing the awards and that they would coordinate with the government to review provisions in the agreements that the government considered disadvantageous to its interests and the consumers.
The government also questioned the extension of concession agreements until 2037, way before the existing contracts were supposed to expire in 2022.
The Metropolitan Waterworks and Sewerage System (MWSS) has canceled the extension of concession deals to 2037. — RSJ, GMA News