By ALBERT CASTRO

Metro Pacific Investment Corp. (MPIC) yesterday said it will invest P5 billion more in Maynilad Water Services Inc. to replace the pipe network in central Manila where the highest systems losses occur.

MPIC chairman Manuel V. Pangilinan also announced the company will convert the loan it gave to Maynilad into equity hiking the company’s stake from 55 to 97 percent.

Pangilinan added that the company will invest more in social infrastructure to grow its portfolio.

Aside from the water utility, Metro Pacific will increase investments in hospital to bring combined bed capacity of the two hospitals it manages in Makati and Davao to 5,000. No timetable was mentioned.

Metro Pacific is also eyeing opportunities in toll roads and the development of the North Harbor.

"If you regard the hospital as a social infrastructure, the investment in the social infra is the bulk of our thrust. You can look at MPIC as more of an infra company," said Pangilinan.

Metro Pacific executive director Angie Palisoc, Jr., said the company had finished laying new pipes for 30 percent of its service area.

This year, the company hopes to network as much as 50 percent of the whole service area, and increase it to 90 percent by next year.

"We are confident that in a year or so there will a significant change in the quality of water and level or service — the number of hours of water availability and the pressure. As a result of these improvements, there are now areas in Paranaque and Cavite which never had tap water before with the welcome problem of too strong water pressure", he said.

Metro Pacific shareholders meanwhile approved the increase in capitalization of the company to accommodate the debt conversion.

Metro Pacific has decided to "buy" the combined $197 million (P8.73 billion) advances from Ashmore Investment Management Ltd. and First Pacific Corp.

The conversion also involves advances other acquisition that Metro Pacific entered into in the past months — the Makati Doctors, Inc., and the Davao Doctors, Inc., hospitals.

The acquisition scheme provides for Metro Pacific to increase its authorized capital stocks to P12 billion, from P4.6 billion, through the creation of 7.35 billion common shares at P1 par value and 5 billion preferred shares at P0.01 par value.

MPHI would then be issued a total of 3.79 billion new shares at P2 each, to cover for the combined advances made by First Pacific and Ashmore worth $157 million. Another $40 million would then be treated as an interest bearing shareholder advance, which would be liquidated through a share or stock-rights offer later on, and the proceeds reverted back to MPHI.

The transaction has to be closed by July 7, according to Lim.

Lim also said that the transaction would dilute minority control in the company, though this would be corrected by the planned follow-on share sales.

Analysts meanwhile see Metro Pacific’s move as a sign of bullishness on its water utilities investment. James Lago, PCCI Securities, Inc. president said that water utilities are considered defensive stocks because of consistent cash flow and water being a commodity.

"Maybe they see growth in the increase of population in their service area. And they may also be looking at more improvements in their service area which could improve profitability," said Lago.

"The water utility business looks promising. It’s not encountering same resistance like in power. MPIC is going into defensive investments, instead of just property, which is cyclical in nature. That’s good especially in these trying times," meanwhile quipped Jose Vistan, AB Capital Securities, Inc. research head.

Metro Pacific closed down P0.30 to P3.00.