By Lenie Lectura - August 3, 2017
PHILIPPINES Renewable Energy Holdings Corp. (PREHC) intends to acquire up to 31.7 percent of Energy Development Corp. (EDC) via a tender offer.
Officials from EDC, the Lopez-led First Gen Corp. and Macquarie Infrastructure and Real Assets (Mira) said on Thursday the offer involves a minimum of 6.6 billion and a maximum of 8.9 billion-common shares, representing 23.5 percent to 31.7 percent of EDC’s total outstanding voting shares.
A tender offer is an offer to purchase some or all of shareholders’ shares in a corporation. The price offered is usually at a premium to the market price.
Under the implementation agreement entered into between First Gen, the parent firm of EDC, and PREHC, the latter is offering a price of P7.25 per share, a 22.3-percent premium to EDC’s 30-day average price of P5.93.
Once the tender offer is completed, PREHC will be indirectly held by a consortium funds managed by Mira, an affiliate of GIC Pte Ltd., Singapore’s sovereign wealth fund.
During a news conference, First Gen said it would keep a 60-percent controlling stake in EDC, adding the sale would deliver approximately P14 billion to the company.
“First Gen is going to keep 40-percent economic and 60-percent voting control, as well,” First Gen Chairman Federico R. Lopez said. “We will continue the day-to-day and management control of EDC.”
First Gen benefits by agreeing to participate in the offer by tendering 10.6 percent of the 50.6-percent total outstanding common shares in EDC. It expects to realize $280 million from this.
Lopez said the success of tender offer is going to seal a strong partnership with Macquarie, adding that such offer is “a clear vote of confidence in EDC’s clean-energy platform from two of the world’s largest infrastructure investors.”
Proceeds of the sale will be “flowing toward First Gen” mainly to be utilized to “maybe reduce debts and also use it for growth”.
Mira Senior Managing Director David Luboff said the tender offer presents an opportunity for EDC shareholders to realize their investment at a premium to the current share price.
“We want to support the long-term growth of EDC,” Luboff said. “If successful, we look forward to forming a long-term partnership with First Gen to bring our experience and expertise to EDC.”