By Victor V. Saulon, Sub-Editor

SHAREHOLDERS of Synergy Grid & Development Phils., Inc. (SGP) have approved the increase in the company’s authorized capital stock to P5.05 billion ahead of a share-swap deal that will pave the way for the listed company to own the controlling shares in the Filipino entities that run the National Grid Corporation of the Philippines (NGCP).

In a disclosure to the stock exchange, SGP said the company’s articles of incorporation have been amended to reflect the capital rise from P50 million previously. Its by-laws have also been amended to create new positions and more independent directors.

“In anticipation of a share swap transaction,” was the stated rationale of the amendments.

The shareholders’ approval takes NGCP a step closer to its listing at the stock market, which is a requirement under the law. It was obtained on Dec. 20. The share swap was approved without the need of a rights offering.

Once approved by the Securities and Exchange Commission, the increase in the company’s authorized capital stock will create new common shares of which 4,100,400,000 will be issued at a price of P20 apiece for 67% of the outstanding shares of OneTaipan Holdings, Inc. and 67% of those of Pacifica21 Holdings, Inc.

“After completing the share swap as described above, SGP will legally and/or beneficially own 67% of the outstanding shares of each of OneTaipan and Pacifica21,” the company said when its board of directors approved the transaction on Dec. 5.

At the stated issue price, the SGP common shares to be swapped have a total value of P82.01 billion.

OneTaipan owns controlling shares in Monte Oro Grid Resources Corp., which holds 30% plus one share in NGCP. Pacifica21 owns controlling shares in Calaca High Power Corp., which in turn owns 30% minus one share in NGCP.

At present, Henry T. Sy, Jr. holds 44.50% of the outstanding capital stock of SGP. The listed firm’s chairman and president is also the controlling shareholder of OneTaipan, where he is a director.

Robert G. Coyiuto, Jr., a director of SGP, owns 34% of the company’s outstanding capital stock. He is also a director and the controlling shareholder of Pacifica21.

“Specifically, 2,050,200,000 common shares of SGP will be swapped with 86,430,000 common shares of OneTaipan legally and beneficially owned by Mr. Sy,” SGP said.

“Additionally, 2,050,200,000 common shares of SGP will be swapped with 871,000,000 common shares of Pacifica21 legally and beneficially owned by Mr. Coyiuto,” it added.

SGP said the transaction would consolidate Mr. Sy’s and Mr. Coyiuto’s ownership and control of NGCP through a common corporate structure. It said the share swap complies with the requirements of Section 37 of the Revised Corporation Code, which provides that at least 25% of the increased capital stock must be subscribed and at least 25% of the amount subscribed must be paid either in cash or other property.

“After the completion of the transaction, the Corporation will have indirect interest in NGCP, which holds the concession for the operation, management, maintenance, rehabilitation and expansion of the nationwide electric power transmission and sub-transmission systems in the Philippines,” SGP said.

NGCP started operations on Jan. 15, 2009 through Republic Act No. 9511, the law that granted the company a franchise to engage in the business of conveying or transmitting electricity through a high voltage backbone system of interconnected transmission lines, substations and related facilities.

Under the said law, NGCP is required to list and make a public offering of its shares representing at least 20% of its outstanding capital stock or a higher percentage that may be provided by law within 10 years from the start of its operations, or until Jan. 14, 2019.

On Nov. 13, 2018, NGCP sought the Energy Regulatory Commission’s approval of its proposed extension of the period for listing of its shares of stock.

Among others, it cited as grounds the pending arbitration case filed before the Singapore International Arbitration Centre against state-led entities Power Sector Assets and Liabilities Management Corp. and National Transmission Corp. on their concession agreement.