First Gen raising P10b for acquisition, debt

Tuesday, 27 March, 2012 Written by Jenniffer B. Austria


First Gen Corp., the power generation unit of the Lopez group, plans to raise P10 billion in fresh funds through the issuance of so-called perpetual preferred bonds.


Perpetual preferred bonds, a form of preferred stocks, have no fixed date on which invested capital will be returned to the shareholder.


First Gen, based on the prospectus it filed with the Securities and Exchange Commission, said it will issue 70 million common shares with an oversubscription of additional 30 million shares at an issue price of P100 per share in May.


The shares will be listed on the Philippine Stock Exchange.


First Gen tapped BDO Capital and Investments Corp. as the lead underwriter and sole bookrunner for the offering.


Proceeds will be used to fund the repayment of debt, fund various acquisitions, support investments and development projects either by the company or its subsidiaries.


The planned offering follows First Gen’s issuance of P10-billion perpetual preferred shares in 2011, which was used to prepay the P5.1-billion outstanding debt of its subsidiary, Unified Holdings Corp. and buy back some of its convertible bonds.


First Gen booked a net income of $35 million last year, a decline of 50.1 percent from $70.2 million in 2010 due to the lower earnings contribution of affiliate Energy Development Corp.


EDC, which is First Gen’s geothermal arm, incurred a loss of $9.3 million in 2011 compared with an income of $52.5 million in 2010 mainly due to the non-cash impairment of $115.3 million (P5 billion) on the Northern Negros Geothermal Project and foregone steam revenues of P1.8 billion following EDC’s acquisition of the Bacon-Manito Geothermal Power Plants in September 2010.


First Gen’s consolidated revenues rose 9.6 percent to $1.4 billion in 2011 from $1.2 billion in 2010 due to the higher dispatch and fuel prices of the 1,000-megawatt Santa Rita and the 500-MW San Lorenzo natural gas power plants in Batangas.


The gas plants operated at the highest dispatch of 89.2 percent compared with 82.7 percent in the previous year. The gas plants delivered stable attributable earnings to the parent of $70.9 million in 2011.


First Gen Hydro Power Corp.’s 132-megawatt Pantabangan-Masiway hydroelectric power partially offset the loss by contributing higher earnings from its ancillary services that it provides to the National Grid Corporation.


(Published in the Manila Standard Today newspaper on /2012/March/28)