NGCP plans backdoor listing via Synergy Grid

Danessa Rivera (The Philippine Star) - December 9, 2019 - 12:00am

https://www.philstar.com/business/2019/12/09/1975353/ngcp-plans-backdoor-listing-synergy-grid

MANILA, Philippines — The tandem of Henry Sy Jr. and Robert Coyiuto Jr. is pushing for a share swap deal that will effectively transform their publicly listed Synergy Grid and Development Philippines Inc. as the holding company of the National Grid Corp. of the Philippines (NGCP).

Synergy Grid is seeking shareholders’ approval for the proposed share swap deal without the need of a rights offering.

The company’s board approved an increase in authorized capital stock to P5.05 billion divided into 5.05 billion common shares.

Of the increase in outstanding capital stock, 4.1 billion common shares will be issued at P20 per share in exchange for 67 percent of the outstanding shares of OneTaipan Holdings Inc. and 67 percent of the outstanding shares of Pacifica21 Holdings Inc.

“After completing the share swap as described above, [Synergy Grid] will legally and/or beneficially own 67 percent of the outstanding shares of each of OneTaipan and Pacifica21,” Synergy Grid said.

One Taipan is owned by Sy and Coyiuto’s Pacifica21, two companies that control NGCP.

OneTaipan owns controlling shares in Monte Oro Grid Resources Corp., which holds 30 percent plus one share in NGCP.

Meanwhile, Pacifica21 owns controlling shares in Calaca High Power Corp., which in turn also owns 30 percent minus one share in NGCP.

“The share swap will be undertaken to formally consolidate Sy and Coyiuto’s ownership and control of NGCP through a common corporate structure,” Synergy Grid said.

The share swap also allows the firm to comply with the requirements of Section 37 of the Revised Corporation Code, which provides that at least 25 percent of the increased capital stock must be subscribed and at least 25 percent of the amount subscribed must be paid either in cash or property.

In 2011, NGCP was supposed to do a backdoor listing through publicly listed Synergy Grid via a share swap deal.

However, the transaction was cancelled since they were unable to obtain a tax-free ruling.

Under the concession agreement awarded in 2009, NGCP was given 10 years to comply with the public listing requirement.

Meanwhile, the franchise granted by Congress under Republic Act 9511 or NGCP’s charter requires the grid operator to comply with its statutory requirement to offer at least 20 percent of its outstanding capital stock to the public within 10 years from Jan. 15, 2009.

The same law also allows the ERC to grant requests for extensions, subject to certain conditions.

NGCP had asked the Energy Regulatory Commission (ERC) to defer the public offering of its shares mandated under its charter for at least a year.

Among the reasons NGCP cited for the deferment of its public offering include the pending disputes among NGCP, the National Transmission Corp. (TransCo) and the Power Sector Assets and Liabilities Management Corp. (PSALM), which are now in arbitration, as well as the threats from TransCo on its concession agreement.