Tanco group disposes EDC stake

Manila Times.net

THE Tanco group has shed its stake in Energy Development Corp. (EDC) after Lopez-controlled First Gen Corp. exercised its call option over the said stocks.

In a disclosure to the Philippine Stock Exchange, First Gen said it will acquire an additional 390 million common shares in EDC at the price of P5.51 each.

“The transaction will be made through a special block sale in the [PSE],” it said.

The shares are held by Tanco-led Philplans First Inc., Rescom Developers Inc., Philhealthcare Inc. and Systems Technology Institute Inc.

The group earlier inked a call option agreement with First Gen wherein the latter was given the right to acquire a cumulative 585 million common shares or 3.12 percent of the total outstanding common stock of the country’s biggest geothermal energy producer, within a three-year period or until April 2013.

At the first year, First Gen may exercise this right at a price of P5.67 per share. On the second and third years, the company may acquire the Tanco group’s remaining shares in EDC at a price of P6.19 and P6.76 per share, respectively.

First Gen already exercised its call option over the group’s 195 million common shares in EDC at P5.67 each in early March.

First Gen said that the recent exercise price of P5.51 represents the first year option of the P5.67, adjusted for the cash dividend of P0.16 declared by the EDC board directors on March 15, 2011, with record date of March 29, 2011.

First Gen is the Philippines’ largest independent power producer with an installed capacity of over 2,800 megawatts. This accounts for approximately 19 percent of the country’s total installed capacity.

It owns more than 40 percent of EDC, which helped drive up First Gen’s 2010 profit by 27 percent to $121.0 million.

Giles Puno, First Gen president, said that the exercise of the company’s call option over EDC shares will increase its economic ownership in the latter to over 46 percent.

“Although there is still work to be done in terms of improving operating efficiencies, this investment affirms our belief in the strong fundamental value of EDC,” he added.

First Gen’s shares rose to P13.04 from P12.80, while EDC’s shares increased to P6.48 from P6.29 on Monday.

Euan Paulo C. Añonuevo