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Palace, Benpres insist Maynilad deal not a bailout
Benpres Holdings Corporation yesterday described as "pathetic" allegations that a political deal had been struck for its divestment of Maynilad Water Services.

Benpres chairman Oscar M. Lopez, in a statement, denied that the government is bailing out the firm in exchange for the Lopezes' support of President Gloria Macapagal Arroyo's election bid.

The Malacañan presidential palace also denied the allegations and insisted the government takeover purely aims to ensure that water services remain uninterrupted.

In launching yet another Patubig project yesterday in Barangay Gulod in Novaliches, Quezon City (northeastern Metro Manila), Ms. Arroyo said "the continuous supply of clean water is the reason why Maynilad is being rehabilitated."

In the statement, Mr. Lopez said "How can it be a bailout when the Lopez Group is completely writing off its equity investment of US$80 million? If there was a political deal with the government, how come in addition to our loss in Maynilad, Meralco's (Manila Electric Co.) rates have remained unadjusted?"

He said the agreement released last week by the Department of Justice, which is still subject to approval by the Securities and Exchange Commission and the Quezon City Regional Trial Court, is between Maynilad, the Metropolitan Waterworks and Sewerage System (MWSS) and 20 creditor banks.

"It is pathetic that other vested interests have taken advantage of the election campaign season by injecting politics into purely business decisions, and in the process demonizing the Lopez family," Mr. Lopez said.

Nongovernment organization Bantay Tubig Network last week said Ms. Arroyo had agreed to save Maynilad and Benpres in exchange for Senator Noli L. de Castro's becoming her running mate. Mr. de Castro rose to prominence as a newscaster for the Lopezes' ABS-CBN broadcast network.

Political opponents of Ms. Arroyo have also linked the deal to the elections.

Mr. De Castro has also denied the allegation but the opposition says Mr. De Castro was enlisted to help Ms. Arroyo's presidential bid, which is facing a strong challenge from movie star Fernando Poe, Jr.

Presidential deputy spokesman Ricardo L. Saludo told reporters during a Palace press briefing "... we are always listening to comments, particularly those who accompany their comments with details and sound proposals..."

Earlier, Presidential Spokesman Ignacio R. Bunye called on the opposition "to spare this issue from politicking and, instead, support the government's move for the common good of water consumers..."

Mr. Lopez also said there was no mismanagement of Maynilad under the Lopezes, saying the family is "not leaving a desolate and financially unsound company as the misinformed wish to believe."

He said Maynilad opted to reorganize at the risk of shareholder interest instead of pursuing a rehabilitation case in court that would drag for years and would put to risk water services in the West Zone of Metro Manila.

Under the agreement with MWSS, Maynilad shareholders will write off PhP6 billion in equity and receivables to settle the dispute with the government. The write-off covers Maynilad's accumulated losses and will result in the Lopezes giving up its shares and right to be refunded for investments in the water utility firm.

Mr. Lopez said that in the last six and a half years of running Maynilad, the company paid more than $200 million out of $800 million in concession loans assumed from MWSS, implemented PhP4.3 billion in capital projects, improved coverage to 85% from 63% of the population, and connected 194,098 new customers.

The Quezon City judge handling the Maynilad rehabilitation case, however, was peeved by the absence of government lawyers yesterday in a hearing scheduled to clarify the deal.

Judge Reynaldo B. Daway suspended the proceeding to wait for Justice undersecretary Manuel A.J. Teehankee, acting Government Corporate Counsel Elpidio de Vega, Jr. or deputy Herman Cimafranca to appear. When they failed to appear or send representatives, the judge reset the hearing for tomorrow, strictly requiring the prompt attendance of the three government lawyers. Mr. Daway chided the government lawyers for failing to appear for the hearing that they themselves had requested.

With the postponement, all parties were given until tomorrow to file their comments on the deal and the "haircut" all the parties will suffer as a result of the Lopez exit.

Meanwhile, Senator Manuel B. Villar Jr. yesterday said the Maynilad deal is not expected to erode the country's chances of attracting foreign investments.

The Senate, however, will review the deal, Mr. Villar said.

For his part, Vice President Teofisto T. Guingona Jr. said the government could have helped Maynilad look for other investors before allowing the Lopezes to exit.

"The principle should be to support the private sector who (sic) is floundering ... The last resort should be the government take-over," Mr. Guingona, who is at odds with Malacañang, said in a press conference. -- reports from Anna Barbara L. Lorenzo, Karen L. Lema, Cecille S. Visto and Carina I. Roncesvalles

http://www.bworld.com.ph/current/TopStories/topstory3.html