SMC takes over Masinloc power plant for $2.4 B

By Danessa Rivera (The Philippine Star) | Updated December 19, 2017 - 12:00am

http://www.philstar.com/business/2017/12/19/1769630/smc-takes-over-masinloc-power-plant-2.4-b

MANILA, Philippines — Diversified conglomerate San Miguel Corp. (SMC) is taking over the Masinloc power project in Zambales after buying out its owners for roughly $2.4 billion.

SMC has reached a deal to acquire the 51 percent stake in Masinloc Power Partners Co. Ltd. (MPPCL) being unloaded by American energy giant AES Corp. as it exits the Philippines.

SMC, through its power arm SMC Global Power Holdings Corp., has signed a share purchase agreement with Masin-AES Pte. Ltd. equity holders AES Philippines Investment Pte. Ltd. and Gen Plus B.V. for  $1.9 billion.

Aside from the AES stake, SMC also bought out Thai power firm Electricity Generating Public Co. Ltd. (EGCO), AES’ partner in the Masinloc plant.

In a statement posted on its website, EGCO said it sold its 49 percent stake in MPPCL for $850 million, which will be used new investment projects, EGCO president Jakgrich Pibulpairoj said.

EGCO’s wholly-owned subsidiary Gen Plus B.V. entered into a share purchase agreement with SMC Global and AES Phil Investment Pte. Ltd. to dispose its 49 percent indirect ownership interest in MPPCL to SMC Global.

“EGCO Group would receive the proceeds of $850 million (27.66 billion Thai baht equivalent) from the divestment upon transaction closing which is subject to the approval of the Philippine Competition Commission and relevant closing conditions agreed by the transaction parties,” Pibulpairoj said.

EGCO expects to complete the transaction within the first half of 2018.

In total, SMC said the implied enterprise value of the company based on the transaction is $2.4 billion.

MPPCL owns, operates and maintains the Masinloc coal-fired power plant comprising two units of 315-megawatt (MW) each, a 335-MW expansion project (Unit 3) which is under construction and a 10-MW battery energy storage in Zambales province.

The new 335-MW unit will employ the supercritical boiler technology that will result in higher efficiency and significant reduction in carbon dioxide emissions.

 “We are happy to be able to acquire Masinloc. The additional power assets provide us an opportunity to increase our footprint in clean coal technology that provides reliable and affordable power, particularly in Luzon. In fact, we have substantially reduced emissions even from our existing power plants to continue promoting the economy’s growth and produce energy in an environmentally responsible way,” SMC president and COO Ramon Ang said.

The completion of the agreement is subject to the satisfaction of certain conditions, including the approval of the Philippine Competition Commission (PCC) and the final execution of the definitive agreements.

Last July, reports surfaced that AES is selling its controlling stake in the Masinloc power plant as the US energy giant has realized gains from its 2008 acquisition and wants to realize “good value” from the sale.

The Masinloc power plant was privatized by government in 2008. AES won the auction for the Zambales-based coal-fired facility with its bid of $930 million.

SMC’s power investments are housed under SMC Global, one of the country’s largest power producers.

It has been active in participating in the government’s privatization of state-owned assets and of control and administration of capacities of government-owned facilities.