First Gen issuing P10B worth of preferred shares

First Gen Corp. plans to raise as much as P10 billion through the issuance of 100 million Series F preferred shares.

In a disclosure to the Philippine Stock Exchange, First Gen said the shares were being offered by way of private placement or issuance to qualified buyers of the series F preferred shares, which would have a par value of P10 per share.

The issue size of the offer—which started Tuesday and is ending Wednesday—is up to P10 billion with a dividend rate of 8 percent per year. The issue date for this offering was scheduled for July 25, 2011.

First Gen reported that it had appointed BDO Capital and Investment Corp. as issue manager, sole bookrunner and lead arranger for the offering. It has likewise consented to the appointment by BDO Capital of RCBC Capital corp. and Standard Chartered Bank as co-arrangers.

The company also signed Tuesday a preferred shares deed poll agreement and a stock transfer, paying agency and trustee agreement.

Last week, parent firm First Philippine Holdings Corp. (FPHC) disclosed that it intended to subscribe to up to P6 billion worth of First Gen’s Series F preferred shares, which would be cumulative, nonvoting, nonparticipating and nonconvertible.

Earlier this year, First Gen CFO Emmanuel P. Singson said proceeds from the fundraising would take care of obligations maturing in 2011 and 2012.

Federico Lopez, chairman and CEO of First Gen, earlier noted that the issuance of perpetual preferred shares would be “an equity fund raising essentially.”

“So, in our minds, it would be good to reduce debt in favor of a bit more equity,” Lopez said.

Since last year, First Gen and its subsidiaries have been taking advantage of a highly liquid market by raising fresh funds via rights offering, syndicated term loan and notes facility. These transactions generated savings on interest costs by prepaying costlier debt.

First Gen’s consolidated interest-bearing debt level dropped by 11 percent, or $130 million, to $1 billion as of end-2010. Funds from the P15-billion rights offering in January 2010 were used to fully pay the P5-billion five-year bond that matured in July 2010 and buy back $74 million of First Gen convertible bonds.