Is iconoclast another word for asshole? If so, i agree… cvj

cvj, if it’s not gloria who’s sitting now, i think you would be praising the man. that is, being consistent with what you’re trying to advocate here.

Government’s dismal record speaks for itself, so there’s no argument about that. And, I thoroughly agree, PCGG-like situations should be avoided.

I don’t think, however, that GSIS intends to get involved in running Meralco. Garcia has said as much. I believe there will be a resolution with management when Garcia gets some of the things he is demanding, among them is more transparency regarding Meralco’s dealings with Lopez-owned companies and IPP’s.

I am not in a position to state whether any state or federal government would allow pension fund monies to be utilized in a proxy war. If the reference is to the United States, I am not sure, although pension funds there are allowed a great deal of leeway. I don’t think, for example, that Calpers would be forbidden to give its proxies to corporate raiders whom it believes can increase share value.

The situation would be even more complicated if the question refers not only to the U.S., but to any country.

In Russia, for example, Yukos Oil Company, one of the world’s largest non-state oil companies which produced 20% of Russia’s oil, was charged by the Russian state for tax evasion and eventually pushed into bankruptcy. Yukos’ ownership was frozen and its officers and members of the board had to flee Russia and became fugitives from justice. There are accusations and counter-accusations as to what happened. Vladimir Putin’s government has credible evidence to show bad faith and double-dealing in Yukos, while Yukos’ former owners show evidence that they were singled out for taking advantage of tax loopholes under the corrupt administration of Boris Yeltsin (while not exactly the same, there are parallels with taking advantage of generous concessions given to IPP’s by a previous administration) .

Something similar happened to Gazprom, another Russian giant, which was assessed huge amounts in taxes and eventually fell into state hands. For an idea of how large a company Gazprom is, it presently provides 25% of Russia’s entire tax revenues and accounts for 8% of Russia’s GNP.

Vladimir Putin has taken heat for taking over these companies. Many of their owners still have considerable wealth and are using their resources to destabilize Putin’s government and to buy the foreign media. But Putin has shrugged it all off and he has enjoyed tremendous popularity in Russia. He is credited for creating the Russian economic miracle.

In Spain, during the first Socialist government of Felipe Gonzalez in 1983, there was the so-called “Rumasa scandal”, wherein Jose Maria Ruiz-Mateos, who was a well-connected and very successful entrepreneur during the previous Franco regime , was persecuted and had his holdings taken over by the state for alleged financial and fiscal irregularities. Ruiz-Mateos owned RUMASA, a huge conglomerate which owned 21 banks, large vineyards and was one of the world’s largest manufacturers and exporter of sherry and other spirits. Ruiz-Mateos challenged the Socialist government in court and alleged that he was being persecuted for his former associations. His on-court antics were well-publicized and he even had to flee the country after he pounced on, and gave a physical beating to, the Socialist Finance Minister, Miguel Boyer (who married Isabel Preysler). After several years of court hearings, Ruiz-Mateos did manage to get back enough assets to form a new conglomerate, Nueva Rumasa. Ruiz-Mateos now claims he was victimized by the socialists and that his hard-won battles in court have vindicated him.

As for “partisan political objectives” in the Meralco case, that is an assumption that must first be proven. The person at the middle of the controversy denies it. There is much by way of chatter and innuendo, but nothing by way of actual proof.

the notion that GSIS (and virtually the government) controls the Meralco board scares both shareholders and investors! the government has a less than zero record in profitably and efficiently running a business!

yet, im still giving Garcia the benefit of the doubt that if GSIS controls the Board, he will implement the reforms he is trumpeting. but i seriously doubt this. if GSIS controls the board, Meralco will become like a PCGG-controlled company

thats possible only if the institutional investors will buy the stock from unsubscribed shares. if these investors will buy the shares from the stock market, the money won’t go into meralco’s coffers.

yup, they have to go to the open market and issue new shares to finance any expansion. No shareholder dilution as the new capital will be deployed on new sources of revenues.

The current management dont have the incentive to do that right now as everything is all well and dandy, they made MERALCO their cash cow. They surely dont want a deep pocket investor scrutinizing their books for obvious reasons. Skeletons in the closet is bad for business and hopefully the current controversies will make them more transparent in their dealings attracting fresh capital to finance new projects.

Perhaps a look at the behavior of Meralco stock prices over the past year can be a useful tool in understanding the matter.

• Meralco stock peaked in July 3, 2007, almost a year ago, and has been on a downtrend (marked by tremendous volatility) ever since. This was a few months before the shit hit the fan, so to speak, on the U.S. housing market, which began to seriously affect stock markets world-wide later. I don’t want to speculate on whether that downward movement had anything to do with disenchantment over Lopez management, but I am prepared to give the Lopezes the benefit of the doubt.

• By mid-August, 2007, Meralco stock prices were drifting around the P70 level, but pulled up to the P90-100 level by the end of August, boosted by the exuberance of interest rate cuts both here and abroad.

• By mid-September, 2007, Meralco stock price was again around the P70’s level, trading at a slow, jagged downward range until it hit the P60’s levels around the end of November, 2007.

• By early December, the stock shot up to the P80’s, boosted by hopeful sentiment due to further interest rate cuts. But this rally was short-lived and, by January, 2008, the price traded around the P60-70 level and more-or-less remained around that range until the first week of May.

• I do think the present controversy between Garcia and the Lopezes has affected recent stock prices. But bear in mind that there was already high volatility even before the proxy wars. So from the P60-P70’s level, the price went down to the P50-P60’s level. While that is a clear downward movement, I don’t think it is significant enough to panic. And, given the ups and downs of the market, I clearly think that the price will bounce once again. It’s only a matter of patience and time. And for those who allege that GSIS is taking a hit because of what Garcia is doing, it ain’t over until you sell your holdings. So profits or losses can’t be counted until GSIS disposes of all of its holdings in Meralco. And that won’t be happening for a while. Given that Meralco is a defensive stock, it’s a safe bet during highly volatile and inflation-ridden times.

And by the way, I have no doubt that Garcia wants to boost Meralco’s stock price. In that respect, he is in the same boat as the Lopezes. Unfortunately (for the Lopezes), Garcia thinks that management is an impediment to shareholder value.

I admit, Garcia’s ways are too rough and confrontational by Philippine standards. But by U.S. standards, it would be par for the course. Kirk Kerkorian was so tough on Daimler Chrysler management that, in the end, he forced Daimler (Mercedes Benz) to sell out of Chrysler.

When intitutional investors sees a more open management, they will pour in more capital to increase its market share by buying the disparate group of power distribution companies in the neighboring regions. More money to make its operations efficient to reduce system loss.

thats possible only if the institutional investors will buy the stock from unsubscribed shares. if these investors will buy the shares from the stock market, the money won’t go into meralco’s coffers.

The way it stands right now is that MERALCO is grossly undervalued even at its 52 week high. Capital infusion wont come in handy when management plays on uneven ground against its shareholders and the consuming public. Big money investors dont want any part of that.

again, it would depend from where the shares will come from. i doubt if the Lopezes will allow the purchase of unsubscribed shares because even though it means additional money for the company, it also means additional shareholders and more potential Winston Garcias