Business Mirror
Published on Wednesday, 06 March 2013 19:17 Written by Lenie Lectura / Reporter
POWER-GENERATION company Energy Development Corp. (EDC) on Wednesday announced plans to raise as much as P7-billion through the sale of bonds to partly support the company’s capital intensive projects and programmed spending. The Lopez-controlled firm plans to issue P5 billion worth of bonds, with an oversubscription option of up to P2 billion. The issuance will be in two tranches of seven and 10 years.
“The proceeds from the issuance will be used primarily to support its business expansion plans, finance capital expenditures and fund general corporate proposes,” said EDC Investor Relations Manager and Corporate Information Officer Erudito Recio.
BDO Capital & Investment Corp. was tapped as issue manager and book runner for the transaction. Recio said EDC has registered its planned bond issuance with the Securities and Exchange Commission (SEC).
EDC’s programmed capital expenditure (capex) this year is P32 billion up from P22 billion in 2011. The bulk of this year’s capex will be spent for the planned Burgos wind-farm project.
For 2012 EDC posted P10.4 billion in net income, higher than the P615 million it posted a year ago, mainly driven by a 15.6-percent surge in revenues.
“EDC’s improved operations allowed for a complete bottomline recovery. EDC ended the year with a net income of P10.4 billion, a significant jump from its 2011 net income of P615 million,” the company said.
The company’s revenues stood at P28.4 billion from P24.5 billion in 2011. This came from increased in electricity rates and revenues from FG Hydro’s ancillary services.
At end-2012, EDC had P11.4 billion in cash but the company utilized its reserve cash to fund investments and financing activities that amounted to P13.7 billion. The balance was sourced from operating cash flows, it said.
Last week EDC had to shut down BacMan geothermal unit 2 in Laguna due to damage caused by a turbine blade that was sheared off. As a precaution measure, unit 1 was also shut down.
EDC said it was expecting P160 million in forgone revenues for each of the unit every month. However, it does not expect to incur additional costs in relation to the replacement of the turbine blades as they are still under warranty. It also covered with a business interruption insurance which will cover interrupted operations beyond a 45-day period.
Meanwhile, Philippine Ratings Services Corp. (PhilRatings) assigned an issue credit rating of “PRS Aaa” for EDC’s proposed P5-billion bond issuance.
“PhilRatings will continue to monitor disclosures in relation to this development to see how this affects the company’s credit standing in relation to its rated debt issues,” it said.
EDC has an outstanding P12-billion bond issuance. Of which, P8.5 billion is due in June 2015 and P3.5 billion in December 2016. PhilRatings announced the maintenance of the “PRS Aaa” rating for these bonds on December 2012.
“PhilRatings believes that EDC’s string credit position remains even with the planned additional debt issuance of the company,” it said. source
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