First Gen sets partial buyback of $300-M 10-year

By Danessa Rivera (The Philippine Star) | Updated October 14, 2017 - 12:00am

http://www.philstar.com/business/2017/10/14/1748457/first-gen-sets-partial-buyback-300-m-10-year-bonds

MANILA, Philippines — Lopez-led First Gen Corp. is partially buying back its 10-year bonds listed at the Singapore Exchange Securities Trading Ltd. (SGX) to bring down its debt level.

The company disclosed yesterday it has decided to purchase some of the SGX-listed $300 million, 6.5 percent fixed rate notes due 2023 from the market.

“As part of First Gen’s debt reduction plan, we purchased some of its US dollar bonds listed in the Singapore Exchange,” chief finance officer Emmanuel Singson said.

The company, however, declined to disclose the amount purchased from the market.

In October 2013, First Gen raised $300 million through a 10-year, non-call senior unsecured bond to finance investments in power projects and general corporate purposes.

The company was then building the San Gabriel project, located adjacent to its existing power plants in Batangas, namely the 1,000-megawatt (MW) Sta. Rita and 500-MW San Lorenzo gas plants. The San Gabriel plant started commercial operations late 2016.

First Gen recently sold 31.7 percent of its stake in Energy Development Corp. (EDC) to Philippines Renewable Energy Holdings Corp. (PREHC) – the consortium of investment fund managers managed by Macquarie Infrastructure and Real Assets (MIRA) and Arran Investment Pte Ltd. of Singapore-based GIC – for approximately $1.3 billion.

Of the total, First Gen and its subsidiary Northern Terracota Power Corp. generated proceeds of around $280 million or P14 billion.

Under the new partnership, First Gen continues to hold a majority stake in EDC, maintaining day-to-day control of the company. The transaction will leave First Gen with a 40 percent economic stake in EDC but will retain a 60 percent voting stake.

First Gen and EDC chairman Federico Lopez earlier said proceeds would flow back to parent firm First Gen, which intends to use it “to reduce debt and also use it for growth.”

In the first half of the year, First Gen registered a recurring income of $84 million, four percent lower versus last year’s $87 million on lower dispatch of its merchant power plants.

The firm said it was able to narrow the decline quarter-on-quarter since its merchant power plants partially recovered from the losses reported in the first quarter with higher electricity prices at the Wholesale Electricity Spot Market (WESM) in the second quarter.

Meanwhile, attributable net income declined 48.7 percent from $113.1 million to $58 million due to a drop in contributions from its subsidiaries.