MPIC eyes strategic partner for toll road, hospital businesses

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By Arra B. Francia, Senior Reporter

METRO PACIFIC Investments Corp. (MPIC) is looking to unload some of its shareholdings in its hospital and tollways businesses in favor of foreign strategic investors in a bid to reduce its current debt levels.

“I think we’ve indicated that we might do a partial divestment of our hospital. And I think it’s time to get in a new strategic partner for the tollways but that would be small, maybe up to 20% will be available,” MPIC Chairman Manuel V. Pangilinan told reporters after the company’s annual shareholders’ meeting in Taguig Monday.

Mr. Pangilinan said they are currently in talks with investment banks to arrange the transaction for their hospital unit Metro Pacific Hospital Holdings, Inc. (MPHHI), which they look to complete within the year.

“So far those who have expressed (interest) are mostly private equity funds. There have been indications from hospital operators down the road as well,” he said.

The MPIC chairman declined to comment on how much could be raised from the divestment. He noted that they could sell their stake of up to nine percent in order to still retain control of MPHHI, since they currently hold 60% of the firm.

The other 40% of MPHHI’s shares is held by the Singaporean government sovereign fund Government of Singapore Investment Corp. (GIC).

Mr. Pangilinan said GIC is aware of the company’s plans to divest from some of its assets in MPHHI, but added that they have yet to confirm whether GIC will sell their shares as well.

Meanwhile, the company is also talking with foreign partners to invest in Metro Pacific Tollways Corp. (MPTC).

The selldown of assets is part of the company’s efforts to reduce its debt, since Mr. Pangilinan said their liabilities have grown substantially during its aggressive expansion.

MPIC’s 2018 annual report showed that the group has a total of P215 billion in interest-bearing debt, which will mature through 2035. Of the total, P11.61 billion is current debt or debt that will mature within the year.

“Debt levels have risen mainly on account of increasing investments being made to grow the business…So we’ve been trying to address those debt levels because it’s eating up on the investment companies,” Mr. Pangilinan told shareholders during the annual meeting.

Stockholders on Monday raised concerns about the weak performance of the company’s shares at the Philippine Stock Exchange. MPIC’s annual report showed that its stock price hit a high of P6.18 each in the first quarter of 2018, and has since been moving at the P4 level. Shares in the firm dropped 0.46% or two centavos to close at P4.30 each yesterday.

Aside from a high debt levels, Mr. Pangilinan also noted that the tariff issues related to its water and tollways businesses remain unresolved, causing concerns for investors.

“The tollways group and water have been in the state of uncertainty with respect to tariffs that should have been granted to companies…There will be a modest effect on profitability of businesses once their tariff adjustments are resolved. The market is waiting for what the impact will be,” Mr. Pangilinan explained.

MPIC’s net income attributable to the parent dropped seven percent to P3.5 billion in the first quarter of 2019, amid a 10% growth in gross revenues to P21.37 billion.

MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.