First Gen to issue P10B worth of preferred shares to pay debts

business mirror

TUESDAY, 19 JULY 2011 19:10 PAUL ANTHONY A. ISLA / REPORTER

LISTED First Gen Corp. on Tuesday issued 100 million of Series F preferred shares worth P10 billion to raise funds to pay liabilities schedule to fall due in the near term.

In a disclosure to the Philippine Stock Exchange, First Gen said the issuance will be made through a private placement or issuance to qualified buyers under Section 10.1 (k) and (l) of the Securities Regulation Code of 100 million Series F preferred shares with a par value of P10 per share. 

 The total size of the offer is expected to reach P10 billion with a dividend rate of 8 percent per annum. 

Offer period will run until July 20, with the issue date targeted on July 25.  BDO Capital and Investment Corp. is the issue manager, sole bookrunner and lead arranger appointed to manage the offer, with BDO Capital, RCBC Capital Corp. and Standard Chartered Bank as co-arrangers.

The said issuance is P3-billion larger than the company previous announcement. First Gen earlier said it is looking at issuing P7 billion worth of perpetual preferred shares in the second half of the year to raise funds to pay maturing obligations.

Emmanuel Singson, First Gen chief financial officer, told reporters proceeds of the share issuance will “take care of paying upcoming maturities in 2012 and 2013. It can be used to pay down maturing debts next year and the convertible bonds due to mature on 2013 as well.”

Francis Giles Puno, First Gen president and chief operating officer, confirmed his company is preparing to pay debts amounting to P5 billion and $130 million due to mature on 2012 and 2013, respectively.

First Gen signed three new loans last year—a P3.75-billion five-year loan with the BDO group, a six -and seven-year $142-million syndicated loan from a consortium of local and foreign commercial banks, and another $100 million six- and seven-year notes facility, also with BDO.

Puno said these transactions generated savings on interest costs by prepaying costlier debt and extinguishing short-term debt. First Gen’s consolidated interest-bearing debt level decreased by 11 percent or $130 million from $1.13 billion in 2009 to $1 billion in 2010.

First Gen said funds from the rights offer were used to fully pay the P5-billion five-year bond that matured in July 2010 and buy back $754 million of convertible bonds in anticipation of a put option date in February 2011.

In addition, Red Vulcan Holdings Corp., the affiliate that directly owns 40 percent common shares and 100-percent preferred shares of EDC, likewise benefited from lower interest expense by reducing debt by 40 percent or P5.5 billion to P8.3 billion from the P13.8 billion while Prime Terracota Holdings Corp., the entity that owns Red Vulcan, fully paid its debt of P2.5 billion.

FG Hydro, the owner and operator of Pantabangan-Masiway hydro plants, successfully raised a P5-billion 10-year term loan from the Philippine National Bank and Allied Banking Corp.

First Gen is the leading clean and renewable energy company in the Philippines with an installed capacity of 2,833 megawatts. It accounts for approximately 18.2 percent of total installed capacity in the country.