First Gen buyout of partner nearsBy Amy R. Remo
Philippine Daily Inquirer
Lopez-led First Gen Corp. is targeting to conclude before the end of June this year the ongoing negotiations for the acquisition of the 40 percent stake held by the British Gas group over the two gas-fired power facilities in Batangas.
The said stake, previously estimated to be worth $400 million, will allow First Gen to gain complete ownership of First Gas Holdings, the parent company of First Gas Power, which owns and operates the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo natural gas facilities.
At present, First Gen has a 60-percent interest in First Gas Holdings.
In a briefing following the company’s listing of its Series G preferred shares Friday, First Gen chairman Federico Lopez said they are hoping to get a good price for the acquisition and seal the deal within the first half this year.
Should this acquisition push through, Lopez said the company will be able to address the financing requirement as it had recently raised P10 billion from the issuance of 100 million perpetual preferred shares, which were listed at the Philippine Stock Exchange yesterday.
“As we list the First Gen Series G perpetual preferred shares, we issue P10 billion at a divident rate of 7.7808 percent for non-call 10 years—the longest non-call tenor issued in the country to date. It is our hope that the compant can leapfrog its growth with the preferred shares proceeds in the same way that it did with the funding from its initial public offering,” Lopez said in his speech Friday.
If the British Gas stake acquisition will not materialize this year, First Gen is also looking to use the proceeds for other planned power projects including the two hydropower projects in Mindanao and the 86-MW Burgos wind power project of its affiliate, Energy Development Corp. This assumes that the feed in tariff rates for renewable energy sources will be issued this year.
A portion of the proceeds may also be used to pay for First Gen’s convertible bonds due on February 11, 2013 and to partially repay its affiliate Red Vulcan Holdings Corp.’s debt. The proceeds of the Series G shares will likewise be used for working capital and business development-related expenses.
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