Lopez-led FGP Corp., a wholly owned subsidiary of First Gen Corp., on Thursday signed a $420-million, 10-year loan facility with seven banks to refinance debts and help fund the proposed 500-megawatt San Gabriel natural gas power project.
In a disclosure to the Philippine Stock Exchange on Thursday, First Gen reported that FGP, which owns and operates the 500-megawatt San Lorenzo natural gas power plant in Batangas, signed the loan with Bank of the Philippine Islands, BDO Unibank Inc., Philippine National Bank, Rizal Commercial Banking Corp., Security Bank Corp., The Hong Kong and Shanghai Banking Corp., and Union Bank of the Philippines.
Proceeds from the loan will be used to repay the existing debt of FGP amounting to $77.4 million (roughly P3.2 billion), while a portion will be used to bring down some of First Gen’s debts.
“We are grateful for the strong support of our relationship banks that enabled this financing to close in record time. Aside from paying down debt at the First Gen level, the proceeds can be used to partly fund our growth plans including the 200-MW to 500-MW San Gabriel gas-fired project, which will begin construction next year and be completed in the 2014/2015 timeframe,” said First Gen president and COO Francis Giles B. Puno.
First Gen is now able to pursue the planned San Gabriel gas project after its buyout earlier this year of the 40-percent stake held by the British Gas Group in First Gas Holdings and subsidiaries, FGP Corp. and First NatGas Power Corp., which is the corporate vehicle for the San Gabriel project.
“Buying out BG [Group] in First Gas helps unlock the gas portfolio growth. We will now accelerate development of the San Gabriel project. We are looking at options regarding the size of the plant,” Puno earlier said in a text message.
Puno earlier explained that it was difficult for First Gen to expand their gas projects previously because they needed to get the consent of their former partner, the BG Group, which was no longer committed to growing the business.
The acquisition of the 40-percent stake of the BG Group for $360 million not only effectively gave the Lopez firm full control over the Sta. Rita and San Lorenzo gas facilities but also gave First Gen the leeway to pursue expansion projects like San Gabriel.