By Danessa Rivera (The Philippine Star) | Updated August 4, 2017 - 12:00am
MANILA, Philippines - Lopez-led First Gen Corp. is selling up to 31.5 percent of subsidiary Energy Development Corp. (EDC) to the consortium of investment fund managers managed by Macquarie Infrastructure and Real Assets (MIRA) and Arran Investment Pte Ltd of Singapore-based GIC for P64.5 billion.
In a disclosure to the Philippine Stock Exchange yesterday, First Gen said it entered into an implementation agreement with Philippines Renewable Energy Holdings Corp., which offered to buy up to 8.9 billion common shares of EDC, its renewable energy unit, for P7.25 each.
The offer represents a 22.3 percent premium to EDC’s last 30-day volume weighted average market price of P5.93 per common share.
The offer represents approximately 23.5 to 31.7 percent of EDC’s total outstanding voting shares. The tender offer will run from 9 a.m. on Aug. 10 until 12 noon on Sept. 18.
“We recognize the value of shareholders’ investment in EDC. The tender offer presents an opportunity for EDC shareholders to realize their investment at a premium to the current share price. If successful, we look forward to forming a long term partnership with First Gen to bring our experience and expertise to EDC,” MIRA senior managing director David Luboff said in a briefing yesterday.
First Gen and its subsidiary Northern Terracota Power Corp. will participate in the offer by tendering 10.6 percent of their interest in EDC, generating proceeds of $280 million or P14 billion, First Gen and EDC chairman Federico Lopez said in the same briefing.
Proceeds will flow back to parent firm First Gen, which intends to use it “to reduce debt and also use it for growth,” he said.
“First Gen welcomes this tender offer from committed long-term renewable energy investors, MIRA and GIC. This is a clear vote of confidence in EDC’s clean energy platform from two of the world’s largest infrastructure investors. This will most definitely be a transformational period in the company’s 40-year history,” Lopez said.
If successful, the transaction will leave First Gen with a 40 percent economic stake in EDC but will retain a 60 percent voting stake.
“Incoming investors wants the key management team to remain. Aside from being beneficial to us, the success of the tender offer is going to seal a strong partnership between First Gen with Macquarie and GIC,” Lopez said.
The prospective partners will bring in an experienced and credible partner to grow First Gen’s renewable energy platform.
However, their entry in EDC will bring down its public float level slightly above 10 percent, First Gen president and COO Francis Giles Puno said. Based on PSE data, EDC has a free float level of 49.28 percent.