LISTED First Gen Corp. is looking at issuing perpetual preferred shares early next year to raise P5 billion to P7 billion to fund its acquisitions and investments, president Francis Giles Puno told reporters.
In an interview, the First Gen head said part of the proceeds may be used to finance the acquisition of BG Energy Holdings and refinance debts due next year, potentially for the convertible bond due in February and then for other investments.
“We also have a $75-million call option on Energy Development Corp. [EDC] shares so we have to fund that as well. Hopefully we’ll do that by March next year. The call option is on our deal for EDC shares owned by the group of STI group led by Eusebio Tanco.
“Our net income showed improvement, as the gas projects had a slight increase but very steady. We grew our income from EDC’s contribution to the net income as well as the reduction in financing costs. We were able to reduce debt through our rights offering,” Puno said.
First Gen earlier said attributable net income to parent increased 849 percent to $66.5 million in the first three quarters of 2010 from $7 million for the same period last year.
In a disclosure to the Philippine Stock Exchange, First Gen attributed the increase in net income to the performance of its subsidiaries, particularly First Gas group, First Gen Hydro Power Corp. and EDC.
First Gen said consolidated net income in the first three quarters increased 43 percent to $104.9 million from $73.3 million for the same period in 2009.
“While our First Gas plants continue to deliver solid and dependable results, earnings growth was delivered by EDC coming mainly from the increased contribution of the plants that it acquired last year. We are fortunate that these developments are aided by the positive sentiment and growth of our economy today,” Puno said.
First Gen’s consolidated revenues likewise jumped by 27 percent to $980.1 million in 2010 from last year’s $771.9 million.
First Gen added that the steady and reliable dispatch of First Gas’s 1,000-megawatt (MW) Sta. Rita and the 500-MW San Lorenzo natural gas-fired power plants were the main contributors for the increase in revenues from sale of electricity by $142.9 million or 19 percent to $906 million from $763.7 million for the same period in 2009.
First Gen said higher revenues were offset by corresponding increase in the pass-through fuel charge to its electricity offtaker and higher operations and maintenance fees paid to Siemens Power Operations Inc.
The First Gas plants delivered stable earnings of $98.4 million, of which First Gen’s equity share is $59 million for the period ending September 30 this yearThe company’s equity share in First Gas is higher by $3.3 million compared with last year.
Equity in net earnings from associates jumped significantly by 599 percent to $58.8 million for the period ended September 30 in comparison to last year’s loss of $11.8 million.
EDC, subsidiary of Red Vulcan Holdings and the country’s largest operator of geothermal-fired power plants, provided higher earnings to First Gen of $53.4 million as of September up by $42.9 million as compared to $10.5 million in the previous year.
First Gen said this improvement resulted from the electricity sales of its 192.5-MW Palinpinon and 112-MW Tongonan geothermal power plants, which were acquired in September 2009.
Adding to the positive variance was FG Hydro’s income contribution which increased by $12.1 million from $3.9 million as of September 2009 to $16 million as of September. This increase was due to better prices at the wholesale electric spot market and higher dispatch of the plants this year.
First Gen said the low interest rate environment helped boost First Gen’s earnings by lowering its interest expenses by $4.2 million or 5 percent to $80.1 million from $84.3 million last year.
This was, however, offset by higher administrative expenses due to various development and refinancing activities undertaken.
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