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By Euan Paulo C. Añonuevo, Reporter
AFTER buying out its partner in
the acquisition of Philippine National Oil Co.-Energy Development
Corp. (EDC), First Gen Corp. wants to sell the same stake to a
separate foreign group.
A First Gen official disclosed
its plan to dispose of the newly acquired 40- percent stake in Red
Vulcan Holdings Inc. on the same day the Lopez-led power generating
firm announced that its first-quarter net income plunged by more
than half.
On the sidelines of First Gen’s
stockholders’ meeting, Richard B. Tantoco, its chief operating
officer, said the company wants to divest a 40-percent interest in
Red Vulcan by the second half of the year.
He said First Gen is already in
talks with a number of interested parties, without revealing their
identities.
The company earlier bought the
40-percent stake of Spalmare Holding BV in Red Vulcan, after
the local unit of the Netherlands-based Reykjavik Energy Invest HF
opted out of the EDC acquisition.
”When we originally bid
for EDC, the plan there would for it to be truly 60-percent Filipino
and 40-percent our partner—whoever that partner was. So the end
goal for us is that ideal situation wherein a partner comes in and
still takes 40 percent of Red Vulcan,” Tantoco said.
First Gen has tapped JP
Morgan (S.E.A.) Ltd. to act as its financial advisor for the
proposed sale.
In a disclosure to the local
bourse, First Gen said profits in the first three months this year
fell by 52 percent to $16 million due to an increase in its interest
expenses and financing charges from debt it incurred with the
acquisition of government’s 60-percent stake in EDC. Red Vulcan
won the bid for the government’s controlling stake in EDC for $1.4
billion.
Besides debts incurred, First Gen
also ascribed its poor performance to higher tax payments of its
1,000-megawatt Sta. Rita power plant, whose tax perks lapsed in May.
Plan to refinance
bulk of debts
Francis Giles B. Puno, First Gen
chief finance officer, said the company also plans to refinance the
bulk of its subsidiaries’ debts, the savings from which will be
used to pay off the parent company’s long-term obligations.
“We’re in the process of
firming out our short-term obligations by refinancing Sta.Rita and
San Lorenzo. The net proceeds of both financing should net us about
$400 million of long-term debt, but we can get to pay down the
facilities at First Gen and Red Vulcan,” he said.
By doing so, First Gen
would trim its debt to a $260-million convertible bond it issued
earlier to settle its sovereign obligations.
”Since they’re
operating companies there is a lot of interest from the bank and
bond market with respect to the feasibility of refinancing debt at
the operating company,” Puno said.
First Gen’s first-quarter
revenues rose 54 percent to $420 million due to the consolidation of
EDC’s financials, following Red Vulcan’s purchase of the
geothermal company in November.
Upgrades on First Gen’s Sta.
Rita and San Lorenzo plants, which are contracted by Manila Electric
Co., allowed the facilities to post higher revenues as well as enjoy
high dispatch levels. The gas plants contributed about 70 percent of
First Gen’s income.
However, the sales at the
company’s 112-megawatt Pantabangan-Masiway hydroelectric power
complex dipped due to reduced irrigation requirements in the
facility’s location.
First Gen and EDC’s shares
closed flat Wednesday at P34.0 and P5.2, respectively.
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