First Gen buys out British Gas for $360M

Business World Onine

Posted on May 30, 2012 11:02:48 PM

FIRST GEN Corp. has amassed full ownership of a subsidiary behind two gas-fired power plants in Batangas after acquiring the remaining 40% stake from the British Gas (BG) Group for $360 million, the Lopez-led firm said in a statement yesterday.

THE STA. RITA power plant seen in this photo along with the nearby San Lorenzo facility is now wholly owned by First Gen Corp. after the Lopez-led firm bought out its partner.

The acquisition caps two years of talks between First Gen and BG, which had been disposing of its international assets.

First Gen acquired the equity interest of Lisbon Star Management Ltd. (LSML) from BG Asia Pacific Holdings Pte. Ltd. through a share purchase agreement.

LSML is the parent firm of BG Consolidated Holdings (Philippines), Inc.

and BG Philippines Holdings, Inc. which own the 40% stake in First Gas. It is registered in the British Virgin Islands.

The acquisition was made through First Gen’s subsidiary Blue Vulcan Holdings Corp.

First Gas operates the 1,000-megawatt (MW) Sta. Rita and 500-MW San Lorenzo natural gas-fired power plants in Batangas.

First Philippine Holdings also executed a Deed of Termination and Release on its joint venture agreements with the BG Group.

“We are extremely pleased with the closing and completion of this transaction. Sta. Rita and San Lorenzo continue to perform reliably and have delivered consistent returns since the start of their commercial operations in 2000 and 2002, respectively...” First Gen Chairman and Chief Executive Federico R. Lopez said in the statement.

“Our partnership with BG in the gas projects has been one of the most successful foreign partnerships in the country,” he said.

The natural gas plants were reportedly the Lopez group’s largest foray into the power generation business prior to the acquisition of the Energy Development Corp. and were deemed instrumental in making the Malampaya gas-to-power project viable.

The transaction was funded by the proceeds of the firm’s recent series “G” perpetual preferred share issuance along with loans and internal funds.

The British group first offered its stake to Korea Electric Power Corp. for $400 million in September 2010 but First Gen questioned the sale and exercised its right of first refusal.

British Gas sold off its energy assets in the United States in 2010 and was actively seeking to divest many of its international projects.

With the conclusion of the purchase, First Gen’s attributable capacity is now at 2,144 MW from 1,544 MW.

Mr. Lopez said the increase in its capacity “does not affect our ability to grow under the legal limits imposed by the Electric Power Industry Reform Act of 2001.”

Shares of First Gen closed at P16.02, up 3.1% yesterday. -- Emilia Narni J. David    source