RPT-UPDATE 1-Lopez family may sell stake in Manila Electric

* Family might sell Meralco stake to an attractive offer * May also sell if money needed to repay debt, re-invest * Looking at geothermal ventures in Indonesia, Latam, Africa

(Repeats story sent late on Friday)

(Adds quotes, details, background)

By Rosemarie Francisco

MANILA, Oct 9 (Reuters) - The Philippines' Lopez business clan might be prepared to sell its stake in Manila Electric Co, the family patriarch said on Friday, which could resolve a struggle for control of the country's largest power retailer.

The Lopez group's 13.4 percent stake in Manila Electric (MER.PS) (Meralco), valued at 16.9 billion pesos ($364 million) at Friday's close, is key to breaking the impasse in the tussle between telephone group PLDT (TEL.PS), which is Manila's most highly valued company, and food-to-power group San Miguel Corp (SMC.PS).

The Lopez family currently votes with PLDT, which holds first refusal rights over the Meralco stake. [ID:nMAN180278]

San Miguel, which increased its interest in Meralco to 43 percent in May, has previously said it was keen to buy the stake. [ID:nMAN478406]

"We see ourselves selling Meralco shares only if the share price is attractive or when we require funding to address our other investments and/or service our own debt obligations," said Oscar Lopez, chairman of the Lopez family's power conglomerate First Philippine Holdings Corp (FPH.PS), said in an emailed response to Reuters' questions.

Lopez also told Reuters the group plans to subscribe to its geothermal unit First Gen Corp's (FGEN.PS) planned rights offer before the year ends, even as it pursues more investments in renewable energy.

Analysts have said they expect the Lopez family, which has run Meralco for decades, to sell out of the power distributor to fund its purchase of more shares in First Gen and to concentrate on power generation, where it has poured huge investment in recent years.

Analysts said Meralco's competing shareholders will likely sit it out in the company until the Lopez family decides to sell. PLDT and San Miguel also stand to benefit from Meralco's improving profit profile after regulators allowed the firm to raise power tariffs by up to 27 percent.

"It's giving them good returns," said Ron Rodrigo, research head at DBP-Daiwa Securities. "Why will you sell something that is giving you good returns?"

"It's status quo for now," Rodrigo said.

Meralco itself forecast a near fourfold surge in its 2009 net income. [ID:nMAN445031]

BETTER FINANCES

First Holdings is expected to spend around 10 billion pesos to maintain its 66.2 percent stake in First Gen when the geothermal firm launches its planned $323 million stock rights offer before the year ends. [ID:nMNA002404]

It will use part of the proceeds from a sale in March of a 20 percent stake in Meralco worth 20.1 billion pesos to the PLDT group to fund its purchase of more shares in its geothermal arm.

"Our financial position is in much better shape and we will also be providing much-needed equity investments into First Gen to support its rights offering," Lopez said.

He added the group would likely end 2009 with 12.7 billion pesos debt, down about 41 percent from 21.6 billion pesos at the start of the year, after it repaid some maturing loans.

The group is also looking at possible geothermal ventures outside the country.

"We certainly have to strengthen our expertise in geothermal and hope to be able to use this expertise to go global," Lopez said. "Over the next five years ... we hope to have geothermal investments in other countries such as Indonesia and even Latin America and Africa."

Lopez said the group may take part in upcoming government auctions of hydro-power plants. It is also developing an 82 megawatt wind power project in northern Philippines.

"From the investments we have made over the last three years, we have refocused our efforts towards clean, renewable energy," he said.

"Over the next five years, we want to continue to focus on this area by increasing our portfolio in geothermal, hydro and hopefully wind."

The group's overall generating capacity now stands at 2,888 MW, mostly via geothermal and natural gas.

(Reporting by Rosemarie Francisco; Editing by Will Waterman) ((rosemarie.francisco@thomsonreuters.com; +63 2 841-8937; Reuters Messaging: rosemarie.francisco.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))