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San Miguel to pursue public offering for power subsidiary

Scales down size of IPO to an initial 10-15%


MANILA, Philippines—San Miguel Corp. is keen on bringing its power generation unit San Miguel Global Power public this year, with an initial stake of 10 to 15 percent to be offered in case of a good opportunity.

Given that the power-generation company has an equity value of $1.5 billion, SMC president Ramon Ang told reporters that the initial public offering should be able to raise about $150 million.

Ang said discussions were ongoing with investment banks to pursue the public offering. Since SMC was willing to sell only 10 to 15 percent to the public, Ang said this should “never be a problem.”

It was earlier reported that SMC had wanted to sell as much as 49 percent of SMC Global Power this year.

“We’re in the process of building several greenfield (power plants)—in Luzon, Visayas and Mindanao,” Ang said.

This year, SMC will start construction of new coal-fired facilities in Davao del Sur and Bataan with a combined capacity of up to 1,200 megawatts. It also continues to explore potential coal resources to provide an “indirect hedge” for the raw material fuel requirements of the power plants, once operational.

Meanwhile, Ang said the sale of SMC’s 32.8-percent stake in utility Manila Electric Co. would likewise depend on the opportunity. Asked whether he was willing to sell the stake to businessman Manuel V. Pangilinan-led Beacon Asset Holdings Inc., he said SMC would look at all interested buyers.

“SMC has a lot of options when it comes to fund-raising,” Ang said. “When there’s a good deal, we can do many things—selling shares, selling genco (generation company), borrow (through) bridge financing… there are so many ways.”

During SMC’s stockholders’ meeting on Tuesday, SMC chairman Eduardo Cojuangco Jr. said projects essential to the group’s master plan were firmly in place. “Over the next five- to six-year period, we will see the completion of many of our major projects and begin realizing the revenues derived from these projects,” he said.

The Naia Expressway tollroad project, for instance, was cited by Cojuangco as a major component of its tollroad network in the south.

“Connecting our South Luzon Expressway and Skyway system to all three major airport terminals in Metro Manila and to the future business and entertainment hub that is (Pagcor-run Entertainment City), the value of this investment goes beyond the potential revenues we project,” Cojuangco said.

While SMC was very much conscious of its bottomline, Cojuangco said its role as one of the country’s “most dynamic” conglomerates was to be an enabler. For instance, he said the upgrade of Boracay’s airport would “catapult the Visayas into a tourism destination of choice in the region” and prepare SMC for future potential airport investments.

Meanwhile, the Tarlac-Pangasinan-La Union Expressway project is seen providing motorists ease of travel while boosting local tourism and helping bring down the cost of transporting goods for farmers and growers from Northern Luzon.

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Tags: Business , Energy , initial public offering , San Miguel Corp. , San Miguel Global Power , stocks

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