SMC Seeks Power Subsidiary Partners

Manila Bulletin
By MYRNA M. VELASCO
November 24, 2011, 11:17pm


MANILA, Philippines — Highly diversified conglomerate San Miguel Corporation (SMC) is advancing talks with targeted equity takers, including foreign firms, on its planned sell-down at its power unit.


SMC group president Ramon S. Ang confirmed that they have “ongoing talks with third parties who have expressed interest to acquire an equity stake in SMC Global Power Holdings Corporation.”


He further indicated that there are “several parties” already coming forward. Nevertheless, he preferred keeping things under wraps at this point pending negotiations with these prospective partners.


It must be noted that the firm decided to defer its initial public offering which could have fetched proceeds of about P36.9 billion ($850 million), and touted as the country’s largest shares offering.


Since May, the SMC chief executive already dropped hints that they may opt to unload shares in the power business arm. It has not given any number though as to what value it expects to corner from the deal.


The scale of shareholdings it may sell to interested parties will be up to 49 percent. This will still leave SMC with a majority stake of 51 percent.


Aside from the company-level shares unloading, the food-to-energy firm also bared previously plans to sell its 620-megawatt Limay thermal power facility which it acquired from the Power Sector Assets and Liabilities Management Corporation (PSALM) years back.


The process for that particular asset divestment is seen concluded within the year. It was gathered that negotiations are now just being wrapped up with the buyer.


While the firm is on divestment binge at its power unit, it is working on compensating whatever lost capacity with its planned greenfield power projects, mainly coal.


As could be gleaned from project plans, the company may spend more than P90 billion to shore up its investments in the power generation sector alone.


There have also been previous plans to foray into liquefied natural gas (LNG) facilities, but that is reportedly being re-studied given the recent spikes in gas prices because of heavy demand in Japan after the Fukushima nuclear incident.