Meralco set to buy majority stake in Redondo
Manila Electric Co., the country’s biggest power distributor, plans to buy a controlling interest in Redondo Peninsula Energy Inc., which is building a 600-megawatt coal-fired power plant in the Subic Bay Freeport Zone.
In a disclosure to the Philippine Stock Exchange, Meralco said that it expects to execute in the next few weeks an agreement to buy into RP Energy, in which the Aboitiz Power Corp., through its wholly owned subsidiary Therma Power Inc., holds a 50-percent stake, while the remaining 50 percent is held by Taiwan Cogeneration International Corp.
“It is envisaged that 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 stated.
In a separate disclosure, APC said the proposed Subic Bay coal-fired power plant, which was estimated to cost over P33 billion, is projected to start commercial operations by 2014, thus augmenting the power supply in the Luzon grid.
Meralco had said that its entry into power generation was 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 beef up generation capacity in the Luzon grid and add to the power utility’s competitive electricity supply portfolio sourced from existing generating plants and from new highly efficient baseload, 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.
In a separate disclosure, Meralco said it had signed P5-billion fixed notes with a group of primary institutional lenders. Issue date is June 29.
The fixed rate note facility agreement consisted of P500 million seven-year note and P4.5-billion 10-year note due 2018 and 2021, respectively. The notes fetched a credit spread of 20 and 21.12 basis points over the relevant respective 7-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.
