Ayala lets Razon group have 51% voting rights in Manila Water, yielding control of East Zone

CONGLOMERATE Ayala Corp. has allowed the group of billionaire Enrique K. Razon Jr. to have majority voting rights in Manila Water, effectively relinquishing control over the East Zone concessionaire.

In its disclosure to the Philippine Stock Exchange, Ayala said its board has approved Razon’s

Trident Water to have proxy rights over the preferred shares owned by its unit and enable the group of the billionaire to have a 51-percent voting interest in Manila Water.

“This arrangement aims to strategically rationalize the economic and voting stakes between Ayala and Trident Water as strategic partners in Manila Water,” the company said in its disclosure.

According to the deal, Ayala’s water unit Philwater Holdings Co. will assign its preferred shares holdings to Trident water to enable it to achieve a 51-percent voting interest in the company.

Philwater owns some 4 billion in preferred shares in Manila Water,

or about 65.95 percent voting shares.

Upon the grant of proxy rights to Trident Water, Ayala’s effective voting interest in the East Zone concessionaire will be reduced to 31.6 percent.

“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,” the company said.

A voting right is the right of shareholders to vote on matters of corporate policy, including decisions on the makeup of the board of directors, issuing securities, initiating corporate actions and making substantial changes in the corporation’s operations.

Razon’s Trident Water is expected to own 25 percent of Manila Water after buying some 820 million common shares at P13 apiece, in a deal worth about P10.7 billion.

Manila Water shares closed Thursday at P14.96 apiece.

The board of Manila Water recently increased its authorized capital stock by 900 million common shares and Razon will gobble up most of those unissued shares.

Ayala still remains the biggest shareholder in Manila Water with a 38.6 percent stake.

“Across all our partnerships, Ayala values the complementary strengths and expertise that we can leverage off a team-based approach, which has been a hallmark of our many joint undertakings with both local and international groups. Both Ayala and Razon share a deep commitment to contributing to the country’s water infrastructure development,” Ayala chairman and CEO Jaime Augusto Zobel de Ayala said in a statement.