First Philippine Holdings Corp., the Lopez group’s holding company for power production and infrastructure assets, said it would likely book P2 billion in foreign exchange losses this year because of the weakening of the peso against the dollar.

To address debt maturity concerns and avoid getting caught in a tight credit situation arising from the global financial turmoil, First Holdings’ First Generation Corp. and subsidiary First Gas Corp. are negotiating with banks on refinancing $700 million in debt. They are also pushing ahead with the sale of 40 percent of Red Vulcan Holdings Corp., which holds a 60-percent stake in Energy Development Corp. First Gen owns 100 percent of Red Vulcan.

In the first half of the year, First Holdings’ foreign exchange losses reached P4.9 billion as the peso fell to 46 to the dollar from 41 at the start of the year.

The losses are expected to decline toward the end of the year with an expected strengthening of the peso during the period, the company said.

“The forecast is the peso will strengthen toward the end of this year as remittances come in, but I doubt it would again reach the 41-42 to one [dollar] level,” First Holdings president Elpidio Ibañez said.

Ibañez said First Gen was in talks with three potential investors that hopefully would buy up to 40 percent of Red Vulcan.

“The money that will go to Red Vulcan will be used to pay debts falling due in May and the excess will go to First Gen to be used to pay bridge loans worth $400 million due in November,” he said.

He added that the Lopez group had received proposals to acquire its Pantabangan hydroelectric power complex in Nueva Ecija province. He said one of the interested parties was geothermal power producer Energy Development Corp., which is also majority-owned by the Lopez group.

“Credit markets are frozen but it’s not that there isn’t any money,” Ibañez said. “There’s plenty of money. In fact, the local banks are pretty liquid. It’s just that people want to hold on to their cash, because they are afraid to relend. It’s precisely why we decided to sell the toll road business.”

First Holdings and parent firm Benpres Holdings Corp. have sold their stakes in the toll road business for P12.2 billion to Metro Pacific Investments Corp., is a unit of Hong Kong-based First Pacific Co. Ltd. With editing by INQUIRER.net