Aboitiz Power to sign loan deals for $1.82B projects

MANILA, Philippines—Aboitiz Power Corp. expects to sign within the year several loan agreements to finance two crucial coal-fed power plant projects worth a combined $1.82 billion and help fund the capital spending of its distribution utilities.

In an e-mail to the Inquirer, APC chief financial officer Iker Aboitiz explained that they expected to sign the loan agreement for the 300-megawatt coal plant in Davao by the end of the second quarter.

The total budgeted capital expenditure for the Davao facility, which APC is undertaking through its wholly owned subsidiary Therma South Inc., is $720 million. Of this amount, 75 percent is expected to be funded by nonrecourse financing while the remaining 25 percent will be funded by equity.

Aboitiz earlier disclosed that the lead arranger for the transaction is BDO Capital.

APC is also expecting to sign by the middle of the third quarter this year the loan agreement for the $1.1-billion, 600-MW coal plant in Subic, which the company is undertaking with power distributor Manila Electric Co. and Taiwan Cogeneration through a vehicle firm called Redondo Peninsula Energy Inc. (RP Energy).

The amount will similarly be funded by 75-percent nonrecourse financing, of which the co-lead arrangers are First Metro, BDO Capital and PNB Capital.

The financial closing for the Subic power project, however, is still dependent on the lifting of the Writ of Kalikasan slapped on it.

“As of now, financial close is expected to occur after the Writ of Kalikasan is lifted. Otherwise, financial closing is currently dependent on the successful resolution of the writ,” Aboitiz noted.

Both coal facilities are considered crucial by the Department of Energy as these will help shore up power supply in their respective areas in about three years’ time.

Meanwhile, Aboitiz also disclosed that the company’s distribution utilities were considering to tap the local debt market to help fund their capital expenditure (capex) requirements.

“Our distribution utilities are looking to raise about P3 billion to P4 billion to fund capex. The capex is aimed at serving the high-digit growth rates we have seen in the past three to four years,” Aboitiz explained. “[The] debt will be via fixed long-term financing, mostly likely from bilateral loans with local banks.”

Aboitiz, however, did not identify which distribution utilities would be securing long-term financing.

Based on data from its website, APC has interests in Visayan Electric Co. Inc. (55 percent), Davao Light and Power Co. Inc. (99 percent), Cotabato Light and Power Co. (99 percent), Cotabato Ice Plant Inc. (100 percent), Subic EnerZone Corp. (99 percent), Mactan Enerzone Corp. (100 percent), Balamban Enerzone Corp. (100 percent) and San Fernando Electric Light and Power Co. Inc. (44 percent).