First Gen borrows $200 million from BDO

Business Mirror
by Lenie Lectura - September 23, 2015

Lopez-led First Gen Corp. said on Wednesday it will borrow $200 million from BDO Unibank Inc. to fund its capital requirements.

In a disclosure to the stock exchange, First Gen said it signed a Term Loan Agreement with BDO Unibank Inc. (BDO) as lender and BDO Capital & Investment Corp. as arranger.

Term loans almost always mature between one and 10 years. They also have a specific repayment schedule and a floating interest rate. The company gave no details.

“First Gen intends to use the proceeds from the notes as funding for its subsidiaries’ capital requirements and other general corporate purposes. The facility will have a tenor of 10 years from issue date,” First Gen said.

The company’s net income in the first semester of the year declined by 15 percent to $143.81 million from $169.44 million in the same period a year ago. The January to June numbers were down on account of lower net income in the second quarter, from $102.17 million to $66.91 million.

Revenues from electricity sales went down to $465.24 million from $478.46 million, while cost of sale electricity stood at $288.69 million.

First Gen is the holding firm of the Lopez group’s power business. It has an installed capacity of close to 3,000 megawatts (MW), half of which is renewable and the other half is natural gas.

First Gen, which operates the Santa Rita and San Lorenzo gas-fired plants in Batangas province with a combined capacity of 1,500 MW, expects to switch on its third gas-fired plant, the 97-MW Avion, in the second half of this year.

A fourth, the $600-million San Gabriel plant with a 414-MW capacity, will be put up in the second half of 2017 or early 2018.

First Gen Chairman Federico Lopez said earlier that an oversupply in Luzon is unlikely to happen, given the increasing demand for power.

Lopez said that by 2018, demand for power would likely grow alongside a growing economy. As such, additional power-generation capacity is needed to help augment the grid’s critical power supply.

Based on the Department of Energy’s 2009-2030 Power Development Plan (PDP), energy sales in Luzon alone are expected to expand to 64,303 gigawatt-hours (GWh) in 2018, while peak demand could hit 10,393 GWh. The PDP added that Luzon will require an additional capacity of 12,500 MW.

“Some of the plants may have reliability problems so we would need buffer,” added Lopez, when asked if there are too many new power plants in pipeline. source