Wednesday, December 21, 2016

PCC approves AboitizPower’s acquisition of GNPower assets

Posted on December 21, 2016

ABOITIZ POWER Corp. (AboitizPower) has secured the nod of the competition watchdog over its acquisition of the stakes held by The Blackstone Group-backed investment funds in two coal-fired power plants in Bataan for $1.2 billion, the company said on Tuesday.
In a disclosure to the stock exchange, AboitizPower said its unit Therma Power, Inc. had been granted approval by the Philippine Competition Commission (PCC) over the purchase of a majority stake in GNPower Mariveles Coal Plant Ltd. Co. and a minority stake in GNPower Dinginin Ltd. Co. The regulator cleared the deal on Dec. 19.

Therma Power is the holding company of the Aboitiz group’s investments in non-renewable energy.

“We consider this acquisition very strategic as it gives us immediate earnings from the operating asset and incremental capacity in the coming years from the plant under construction and its expansion,” Antonio R. Moraza, AboitizPower president and chief operating officer, in a statement.

Sought for comment, PCC Chairman Arsenio M. Balisacan said AboitizPower’s acquisition “does not appear to result in substantial lessening of competition in the relevant market.”

“First, it would not significantly increase market power nor enhance the likelihood of coordination in the relevant market. Second, the electricity generation market currently permits the entry and expansion of firms,” he said in an e-mail interview.

Upon completion of the deal, AboitizPower said it was to pay $1.197 billion “subject to certain price adjustments at closing depending on conditionalities.”

The acquisition will be funded by a combination of internally generated cash and financing from foreign banks, AboitizPower said.

“The acquisition of the beneficial ownership interests in the [two companies] is in line [AboitizPower’s] target to increase its attributable net capacity to 4,000 MW [megawatts] by 2020,” AboitizPower said.

The transaction, which was approved by the company’s board of directors on Sept. 5, was covered by a purchase and sale agreement between Therma Power over the partnership interests held by the affiliated investment funds of The Blackstone Group L.P. in World Power Holdings, L.P. and Sithe Global Power, L.P.

“This will result in [Therma Power] ultimately acquiring a 66.1% beneficial ownership interest in GNPower-Mariveles and a 40% beneficial ownership interest in GNPower-Dinginin,” AboitizPower said.

The Board of Investments approved the acquisition of GNPower-Mariveles on Nov. 21.

GNPower-Dinginin is developing supercritical coal-fired power with two identical units each with a net capacity of 668 MW. It is expected to start commercial operations in 2019.

GNPower-Mariveles owns a subcritical coal-fired power plant, including associated and auxiliary assets. The plant consists of two units totaling 604 MW. It started operations in 2014.

On Thursday, shares in AboitizPower were unchanged at P43 each.

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