Meralco to buy controlling stake in builder of Subic coal-fired power plant

MANILA, Philippines – The Manila Electric Co., the country’s biggest power distributor, plans to acquire a controlling interest in Redondo Peninsula Energy Inc., which is building a 600-megawatt coal-fired power plant within the Subic Bay Freeport Zone.

In a disclosure to the Philippine Stock Exchange, Meralco said it would execute in the next few weeks an agreement with RP Energy, in which the Aboitiz Power Corp., through its wholly-owned subsidiary Therma Power Inc. would hold a 50-percent stake, while the remaining 50 percent held by Taiwan Cogeneration International Corp.

“It is envisaged that the Meralco Group, (through Meralco Power Gen Corp.) will have a majority ownership interest in RP Energy while APC and Taiwan Cogeneration will be diluted equally and have a combined holding of less than 50 percent,” the company explained.

In a separate disclosure, the APC said the proposed Subic Bay coal-fired power plant, estimated to cost over P33 billion, has been projected to start commercial operations by 2014, thus augmenting the power supply in the Luzon grid.

Meralco says its entry into power generation is part of its overall strategy to assist in ensuring efficient, adequate and reliable electricity at cost-competitive rates.

According to Meralco, the potential partnership with Taiwan Cogeneration and Therma Power will help augment generation capacity in the Luzon grid and add to the power utility’s competitive electricity supply portfolio secured from existing generating plants and from new highly efficient base-load, mid-merit and peaking power plants, which Meralco Power Gen is putting up to meet customer requirements.

The power distributor reiterated its commitment to customers of offering a wide range of valued products and services as a total energy solutions provider.

Meanwhile, in a separate disclosure, Meralco said it signed a P5-billion fixed notes agreement with a group of primary institutional lenders. Issue date will be in June 29.

The fixed rate note facility agreement consisted of P500 million seven-year notes and P4.5-billion 10-year notes due 2018 and 2021, respectively. The notes fetched a credit spread of 20 and 21.12 basis points over the relevant respective seven-year and 10-year benchmark rates.

According to Meralco, the notes issue was also 2.35 times oversubscribed from the original announced size of P3 billion, with books reaching P7.05 billion in orders, thus allowing Meralco to exercise its oversubscription option of P2 billion.

The oversubscription demonstrated investor confidence in Meralco’s strength and leadership.

“We are pleased with the results of the transaction and would like to thank our investors for their support and for joining us in bringing Meralco to further heights,” noted Meralco senior vice president and chief finance officer Betty C. Siy-Yap.