Proxy Battle

As expected, the stockholders' meeting of Meralco came to a showdown between the government (GSIS) and the Lopez family. Right after stepping into the premises of the Meralco Theatre, Winston Garcia of the GSIS already got jeered at by company employees and Lopez supporters. Garcia, at the last minute managed to convince the SEC to stop the proceedings pending his appeal questioning the validity and legality of the proxy votes. The board defied the order anyway and proceeded with the meeting.

As a political move, this is probably the best time for Gloria's administration to take over a highly unpopular power utility firm, or at least take it away from the Lopez family and earn pogi points from the public. Mind you, any Presidentiable making a statement of support to the Meralco Group right now would be taking a political suicide.

The GSIS has always been used as the conduit-- due to its substantial investments-- for take over bids in the country. In fact, GSIS was instrumental in the hostile takeover of PLDT by the First Pacific Group and forcing the Cojuangcos to sell theirs shares, as well as changing the landscape of the banking industry (the Equitable-PCI merger). The GSIS usually sells its shares to the interested party or potential majority owner via cross transactions.

Expecting a battle, I'm pretty sure the Lopez family solicited those proxy votes from minority shareholders to keep a majority of seats in the board of directors. The Lopezes managed to win the majority of seats, and the government lost one. Whatever the outcome of the stockholders' meeting is, it is still going to end up in court.