Thai EGCO buys stake in Masinloc Power

Pays $453 million for 40.95%
July 16, 2014 (updated)

BANGKOK (Reuters) – Thailand’s second-largest private power producer, Electricity Generating Pcl. (EGCO), on Wednesday said it had bought a 40.95 percent stake in Philippines-based Masinloc Power Partners for $453 million.

EGCO, like other Thai power producers, is looking for opportunities to expand overseas as a slowing economy dampens demand at home.
The Thai firm has signed a deal to buy the indirect stake in Masinloc Power Partners Co. Ltd from Singapore-based AES Phil. Investment Pte. Ltd., President Sahust Pratuknukul said in a statement.

Following the deal, AES holds 51 percent in Masinloc with International Finance Corporation holding 8.05 percent, the statement said.
Masinloc operates a 630-megawatt power plant, located in Zambales province on the island of Luzon.

Earlier, AES Corporation announced in the Philippines it was selling a 45 percent stake in its Philippine holding company businesses in the Philippines to Electricity Generating Public Company Limited (EGCO Group), a Thailand-based Independent Power Producer (IPP), for $453 million.

In a statement, AES said it has entered into an agreement to sell the minority interest in Masin-AES Pte. Ltd., a wholly-owned subsidiary of AES that owns AES’ business interests in the Philippines, to EGCO.

The sale includes indirect stakes in the 630 MW Masinloc coal-fired power plant in operation since 1998; expansion of the existing Masinloc facility; and approximately 60 MW of potential energy storage projects in advanced development.

After the sale, AES will own a 51 percent net stake in Masinloc, EGCO Group will own 41 percent, and the International Finance Corporation (IFC) will retain 8 percent.

AES will continue to manage and operate the plant. AES and EGCO Group have agreed to use the Masinloc platform as their exclusive vehicle for growth in the Philippines.

“This transaction demonstrates how we are executing on our strategy, by bringing in partners to realize the value of our portfolio and capitalize on the growth potential across our markets,” said AES president Andrés Gluski.

He added that “we see attractive growth opportunities in the Philippines and are well-positioned to invest in the expansion of our existing plant, as well as energy storage projects, with our partners.”

In 2008, AES purchased a 92 percent interest in Masinloc, with IFC as minority partner, for total enterprise value of $1.1 billion. The acquisition was funded with equity contributed by AES and IFC and $635 million of non-recourse debt.

“The Philippines continues to experience robust economic growth, resulting in increasing demand for energy, which creates a great opportunity for companies like AES and EGCO to meet these needs by providing safe, reliable and affordable energy,” said AES’ Asia strategic business unit president Scott Kicker.

He added that, “with this strategic partnership, we look forward to pursuing growth opportunities that will help meet the country’s growing demand for energy.”

This transaction is expected to close in the third quarter of 2014. AES expects to invest the proceeds, after any closing price adjustments, in a credit neutral manner consistent with its capital allocation framework. (With report from James A. Loyola) source