On Salcon’s sale of its shares in Bohol Light: Guv Aris assures Boholanos' interest is protected

By PR | 10:32 AM October 27, 2024

Bohol Governor Erico Aristotle Aumentado has assured the public that the interest of the provincial government of Bohol in Bohol Light Company, Inc. (BLCI) and the welfare of electric consumers will be protected at all times after the Salcon Consortium sold its 70 percent shares in the power distribution utility.

Salcon Consortium, represented by James Roy Villareal, officially confirmed it has sold its shares to Primeelectric Holdings Inc. (PHI) in a letter to Aumentado dated October 16, 2024.

Aumentado and his finance team said there are a number of ways to protect the Province’s interest in BLCI with the entry with the new majority owner.

This protection can be done through a shareholders’ agreement between the Province and PHI stipulating, among others, that the 30 percentshares of the Province in BLCI shall never be diluted and certain major decisions of the board must require a unanimous vote.

Decision points that require unanimous votes may include release of funds for substantial investment, issuance of new shares of stocks, application for increase of rates, and other major actions affecting public interest.

This means, for example, that even if the Province only has 2 directors in the 7-man board, there can be no application for power rate increase if one director will oppose the measure. Any power rate increase, however, needs approval by the Energy Regulatory Commission (ERC).

With the confirmation that PHI is the Province’s new partner, the Board of Directors of BLCI will be reorganized and new directors representing PHI will be appointed.

Aumentado is set to create a joint executive-legislative team to oversee the negotiation with PHI for the shareholders agreement. Assistance from experts in the private sector will be sought to help evaluate the terms of the agreement. Stakeholders will also be brought in for their comments.

The Salcon Consortium is composed of SPC Light Company, Inc., ARCC Investments, Inc., Pure and Pam, Inc., and Mr. Joven Uy. PHI is a sister company of MORE Electric and Power Corporation of the Razon Group of Companies.

On April 29, 2024, Salcon gave notice to the Province that it is selling its 70 percent shares in BLCI and giving opportunity to exercise the Province’s right of first refusal or a chance to buy the shares first before Salcon will sell the shares to another interested party.

Primelectric President and Chief Executive Officer Roel Castro. Photo: Helen Castaño

The Local Finance Committee (LFC) and the 2 directors of the Province, who were tasked to evaluate the matter, submitted their assessment to the Governor and the Sangguniang Panlalawigan on May 28, 2024 concluding that the Province does not have existing available funds to buy the 70 percent shares which is worth P350 million pesos and it does not have the technical capability and manpower resources to operate the utility if ever it will become its sole owner.

The LFC also recommended to (a) Consider the amount of P6.67 as the fair market value per share of BLCI without need of hiring a third party assessor; (b) Offer to buy only an equivalent of 10 percent of the outstanding shares to increase its 30 percent stake; (c) Allocate P50 million pesos to pay for the 10% additional shares; and (d) if ever Salcon will refuse the offer, persuade BLCI to increase the value of its corporate social responsibility (CSR) projects and activities.

Salcon responded it cannot sell only 10 percent as it intended to sell all of its 70 percent shares in order to get the full benefit of its investment.

On June 25, 2024, the Sangguniang Panlalawigan passed Resolution No. 2024-649, “Expressing the stand of the Provincial Government of Bohol (“Province”) to decline the offer of the Salcon Consortium to purchase its seventy percent (70%) shares of stocks in the Bohol Light Company, Inc. (BLCI) and to enjoin the buyer of the said shares to ensure that the cost of the electricity in the service area will remain as among the cheapest in the Visayas.”

Between September 10 to October 9, 2024, the members of the Salcon Consortium executed their respective Deeds of Absolute Sale to PHI, according to the letter of Villareal.

Neither the Province nor any of its officials have any participation in the transaction between the members of the Salcon Consortium and PHI, which was a purely private matter.

Further, there is no legal basis for the Province to demand to whom should the members of the Salcon Consortium sell their respective shares of stock in BLCI.

Last week, under the management of PHI, BLCI announced a huge cut of the power bill at P3.81 per kilowatt hour starting October 16. This meant that instead of paying P13.62/kwh, residential consumers will pay an average of P9.81/kwh only.

On Salcon’s sale of its shares in Bohol Light: Guv Aris assures Boholanos' interest is protected

By PR | 10:32 AM October 27, 2024

Bohol Governor Erico Aristotle Aumentado has assured the public that the interest of the provincial government of Bohol in Bohol Light Company, Inc. (BLCI) and the welfare of electric consumers will be protected at all times after the Salcon Consortium sold its 70 percent shares in the power distribution utility.

Salcon Consortium, represented by James Roy Villareal, officially confirmed it has sold its shares to Primeelectric Holdings Inc. (PHI) in a letter to Aumentado dated October 16, 2024.

Aumentado and his finance team said there are a number of ways to protect the Province’s interest in BLCI with the entry with the new majority owner.

This protection can be done through a shareholders’ agreement between the Province and PHI stipulating, among others, that the 30 percentshares of the Province in BLCI shall never be diluted and certain major decisions of the board must require a unanimous vote.

Decision points that require unanimous votes may include release of funds for substantial investment, issuance of new shares of stocks, application for increase of rates, and other major actions affecting public interest.

This means, for example, that even if the Province only has 2 directors in the 7-man board, there can be no application for power rate increase if one director will oppose the measure. Any power rate increase, however, needs approval by the Energy Regulatory Commission (ERC).

With the confirmation that PHI is the Province’s new partner, the Board of Directors of BLCI will be reorganized and new directors representing PHI will be appointed.

Aumentado is set to create a joint executive-legislative team to oversee the negotiation with PHI for the shareholders agreement. Assistance from experts in the private sector will be sought to help evaluate the terms of the agreement. Stakeholders will also be brought in for their comments.

The Salcon Consortium is composed of SPC Light Company, Inc., ARCC Investments, Inc., Pure and Pam, Inc., and Mr. Joven Uy. PHI is a sister company of MORE Electric and Power Corporation of the Razon Group of Companies.

On April 29, 2024, Salcon gave notice to the Province that it is selling its 70 percent shares in BLCI and giving opportunity to exercise the Province’s right of first refusal or a chance to buy the shares first before Salcon will sell the shares to another interested party.

Primelectric President and Chief Executive Officer Roel Castro. Photo: Helen Castaño

The Local Finance Committee (LFC) and the 2 directors of the Province, who were tasked to evaluate the matter, submitted their assessment to the Governor and the Sangguniang Panlalawigan on May 28, 2024 concluding that the Province does not have existing available funds to buy the 70 percent shares which is worth P350 million pesos and it does not have the technical capability and manpower resources to operate the utility if ever it will become its sole owner.

The LFC also recommended to (a) Consider the amount of P6.67 as the fair market value per share of BLCI without need of hiring a third party assessor; (b) Offer to buy only an equivalent of 10 percent of the outstanding shares to increase its 30 percent stake; (c) Allocate P50 million pesos to pay for the 10% additional shares; and (d) if ever Salcon will refuse the offer, persuade BLCI to increase the value of its corporate social responsibility (CSR) projects and activities.

Salcon responded it cannot sell only 10 percent as it intended to sell all of its 70 percent shares in order to get the full benefit of its investment.

On June 25, 2024, the Sangguniang Panlalawigan passed Resolution No. 2024-649, “Expressing the stand of the Provincial Government of Bohol (“Province”) to decline the offer of the Salcon Consortium to purchase its seventy percent (70%) shares of stocks in the Bohol Light Company, Inc. (BLCI) and to enjoin the buyer of the said shares to ensure that the cost of the electricity in the service area will remain as among the cheapest in the Visayas.”

Between September 10 to October 9, 2024, the members of the Salcon Consortium executed their respective Deeds of Absolute Sale to PHI, according to the letter of Villareal.

Neither the Province nor any of its officials have any participation in the transaction between the members of the Salcon Consortium and PHI, which was a purely private matter.

Further, there is no legal basis for the Province to demand to whom should the members of the Salcon Consortium sell their respective shares of stock in BLCI.

Last week, under the management of PHI, BLCI announced a huge cut of the power bill at P3.81 per kilowatt hour starting October 16. This meant that instead of paying P13.62/kwh, residential consumers will pay an average of P9.81/kwh only.