Ayala-led Manila Water Co., Inc. is raising its authorized capital stock to P4.4 billion or an equivalent increase of 900 million common shares, which is the same number of shares it is carving out “for cash, properties, or assets” to carry out its business.
“This move will give flexibility to the company to raise additional capital and funding when needed. Our access to different funding sources will allow us to be deliberate and to take decisive actions as needed. The present circumstances require us to be proactive and ready with different alternatives and options,” the Ayala-led company told the stock exchange on Friday.
It said the move was approved by its board on Friday afternoon. It will change items in its articles of incorporation, which previously set the company’s authorized capital stock at P3.5 billion.
Manila Water is also increasing its carved-out shares to 900 million unissued common shares from 300 million as approved by the board, which set the minimum selling price of P10 per share for the issuance of the common shares.
The carved-out shares are reserved or allocated for issuance in one or more transactions or offerings. The proposed amendment of its incorporation papers will be presented to shareholders for approval at the company’s annual meeting on April 17, 2020.
Earlier in the day, Manila Water has requested for voluntary trading suspension of its shares at the stock market starting on Friday until after the weekend break without giving more details on the reason.
“In view of material events that could reasonably be expected to occur from today until prior to the start of trading on Monday, February 3, 2020, we request for a voluntary trading suspension,” the company said.
A representative of the company did not respond to a request for comment on the trading suspension and additional information on the reason for doing so.
“The request is made to ensure that our shareholders and the investing public would have equal access to information and are afforded the opportunity to consider this in their trading activities,” Manila Water told the stock exchange.
Japhet Louis O. Tantiango, research associate at Philstocks Financial Inc., said he was still waiting for further disclosures from the company aside from the increase in its authorized capital stock.
“Judging from MWC’s (Manila Water’s stock symbol) share price movement in the past trading days, especially yesterday (Thursday), seemingly, investors are speculating that a deal to extend their contract may already be on the table,” he said.
The trading suspension comes after Finance Secretary Carlos Dominguez III addressed questions about Manila Water, Metro Manila’s east zone water concessionaire, and its counterpart in the west zone, Maynilad Water Services, Inc.
In a press release quoting what transpired during a forum on Thursday, the Finance department said the government’s contracts with the water concessionaires have “one apparent lopsided provision that favored the contractors.”
It said the contracts surrendered the state’s regulatory powers in empowering the companies to seek arbitration abroad to challenge or oppose policies enforced by the government.
“(So) why is it (then that) in the water concessions, (they) can go to Singapore and ask to challenge a regulation here in the Philippines? Now isn’t that onerous?,” the release quoted Mr. Dominguez as saying.
He noted that while such an action could have been taken by the board of state-led Metropolitan Waterworks and Sewerage System (MWSS), there had not been any change in the current contracts of the water service providers.
“But really, have we cancelled the contracts?” he said.
“There was a board resolution issued by the MWSS. Has it been acted upon? No,” he added.
Mr. Dominguez did not identify the resolution, but the MWSS in December last year said it had issued a resolution cancelling the extension of the concessionaires’ contracts that would run from 2022 to 2037.
The overseas arbitration he was referring to favored Maynilad for losses amounting to P3.4-billion, later adjusted to P3.2 billion, after its rebased water tariff was not implemented by the MWSS.
Manila Water also secured a favorable ruling in a separate arbitration proceedings in Singapore. The tribunal ordered the government to indemnify the company up to P7.39 billion for losses suffered from June 1, 2015 until 22 Nov. 22, 2019, plus other costs.
Officials of both companies had said they were willing to waive the collection of the separate arbitral awards.
Shares in Manila Water traded as low as P5.01 each on Dec. 17, 2019 at the height of speculations on its uncertain future after government officials questioned supposed “onerous” terms on its concession contract. The company’s shares have since recovered to close at P12.16 each on Thursday. — Victor V. Saulon