SMC Pursues Power Unit Reorganization

Manila Bulletin

By MYRNA M. VELASCO

August 15, 2011, 12:27am

MANILA, Philippines — In preparation for its planned initial public offering (IPO) toward the end of this year, the power unit of San Miguel Corporation (SMC) would be pursuing “reorganization” which may then realign its investment plans in this segment.

In a disclosure to the Philippine Stock Exchange (PSE), SMC Global Power Holdings Corporation indicated that its board of directors approved “the reorganization of the power business and increase in the authorized capital stock of SMC Global.”

When pressed for details, company executives indicated that the plan is “still a work in progress…but it will be in preparation for the IPO.”

Prior pronouncements made by SMC president Ramon S. Ang inferred that the company would want to raise $500 million from the stock offering.

The conglomerate also disclosed that its San Miguel Pure Foods Company Inc. purchased the 59,090,900 shares of stock held by its parent in Manila Electric Company (Meralco) at P220 per share based on the approval given by its Board.

“The purchase price of the shares is based on the average trading price of Meralco for the period January 1, 2011 to July 31, 2011 with a discount of 12%,” the company said.

SMC noted that the stocks it sold to its subsidiary “form part of the shares (it) bought from the Government Service Insurance System.”

It added that “the company has fully paid the purchase price of these shares to GSIS and have been crossed in the PSE on August 5, 2011.”

As the SMC Energy group braces for reorganization on its power portfolio, the company also continues to look at opportunities being offered in the industry – including prospective capacity expansions and asset acquisitions from the Power Sector Assets and Liabilities Management Corporation.

The company’s chief executive has revealed that they are among the nine interested parties in the appointment of independent power producer administrator (IPPA) for the 106.8-megawatt Naga coal and 39-MW Naga diesel assets.

“We will join the bidding so the government will get a good price,” Ang said. The bid submission date for Naga’s IPPA is October this year.

The firm is also looking at expanding its electricity generation portfolio – to the extent of considering the proposal of plant operator TeaM Energy Philippines on the expansion of the 1,200-MW Sual facility.