First Gen eyeing BG stake

Manila Standard Today

First Gen Corp., the power generation unit of the Lopez Group, plans to issue P5 billion to P7 billion worth of preferred shares to finance acquisitions and other investments, a ranking official said over the weekend.

“We’re looking at issuing perpetual preferred shares, we’re hoping anywhere from P5 billion to P7 billion in preferred shares,” First Gen president Francis Giles Puno told reporters. First Gen plans to sell the shares by the first quarter of next year.

Puno said First Gen was raising funds to partially fund its acquisition of the BG (British Gas) Group’s 40-percent stake in the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo gas-fired power plants.

“That is if we’re able to acquire the BG stake, then that’ll be used to partly fund the BG stake. That is just an option. We are still exploring our options,” he said.

The BG Group said in September it forged an agreement with Korea Electric Power Corp. to sell its 40 percent stake in the gas plants for $400 million.

The transaction is “subject to standard completion adjustments, including interest to be paid to BG Group upon closing which is expected in the first quarter.”

Puno said First Gen also planned to use the proceeds of the preferred shares to refinance the call option on unit Energy Development Corp.

“We also have a call option on EDC shares so we have to fund that. Hopefully, we”ll do that by March next year. The call option’s about $75 million, the one we entered into with the EDC shares owned by the STI group,” he said.

First Gen reported higher attributable net income to parent of $66.5 million in the first nine months, up 849 percent from $7 million posted year-on-year, due to the strong performance of subsidiaries.

First Gen said increased earnings were driven by the strong operating performance of the First Gas group, First Gen Hydro Power Corp. and EDC.

First Gen’s consolidated net income in the first three quarters rose 43 percent to $104.9 million from $73.3 million on year. Alena Mae S. Flores