First Gen to refinance $400-M debt

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SUNDAY, 05 AUGUST 2012 18:00 PAUL ANTHONY A. ISLA / REPORTER

FIRST Gen Corp., one of the country’s biggest power producers, is in talks with local and foreign banks to refinance $400 million in debt for one of its gas-fired plants ahead of schedule.

In a chance interview with reporters on Friday, First Gen president Francis Giles Puno said the company is planning to tap a 10-year syndicated loan, which it expects will be completed this year.

“We are talking to all of the local banks, both local and foreign,” Puno said. “This is for the refinancing of the San Lorenzo plant, so we are trying to raise $400 million.”

First Gen chief finance officer Emmanuel Singson said the original loan, signed in 2000, is set to mature from 2014 to 2016.

“It’s still a long way and we just wanted to refinance it with better rates right now,” Singson said, adding that the specific timing of the borrowing will depend on market conditions.

The Bangko Sentral ng Pilipinas cut interest rates by another 25 basis points on July 26 to another record low of 3.75 percent.

First Gen operates the San Lorenzo gas-fired plant, which has a 500-megawatt (MW) capacity, as well as the Santa Rita gas-fired plant, with a capacity of 1,000 MW. It recently took full control of both plants after buying the 40 percent stake of UK-based BG Group Plc. for $360 million.

That deal was funded by a P10-billion sale of preferred shares in May.

Puno said the additional stake will bring in an another $40 million in full-year contributions, although for the year, the company will only recognize the new funds for seven months given that negotiations were finalized about halfway through 2012.

With the buyout, Puno reiterated that First Gen can pursue the expansion of the San Gabriel gas project.

“Our first phase will probably be 300-MW of expansion and then potentially, with a plan to double the capacity over the next five years,” Puno said.

He said First Gen can also proceed with the expansion of 53-MW worth of run-of-river hydropower projects in Mindanao with the recent approval of the feed-in-tariffs for renewable energy sources.

First Gen, a subsidiary of First Philippine Holdings Corp., slid 1.91 percent to P18.40 each on Friday, giving it a market value of P63.1 billion.     source