The P2.8-billion investment of MAP 2000 Development Corp. (M2DC) in Basic Energy Corp. is targeted to be completed in the second quarter after they signed a share-acquisition agreement last December.
In a disclosure, Basic Energy said “the transaction will result in a fresh capital infusion into the company, allowing it to grow and expand its current portfolio of energy-focused projects, including interests in other renewables such as solar, wind, biomass, petroleum, and other types of energy projects.”
Through this deal, it hopes to build a robust project portfolio that would bring in revenues in the short to medium term and enhance shareholder value.
“Once the M2DC transaction is closed sometime in the [second quarter] of 2021, only then can the company, through its board and management, seriously look at investment options and opportunities,” it added.
Basic Energy aims to fulfill the conditions for the transaction’s completion between January and April. Once done, the closing date and partial payment of the subscription price is expected in May.
Payment of the balance is expected in July once the Securities and Exchange Commission approves the increase in Basic Energy’s authorized capital stock.
The transaction involves the subscription of 9,827,990,853 primary shares of stock, to be issued out of the increase in Basic Energy’s authorized capital stock from P2.5 billion to P5 billion.
The subscription represents 67 percent of the increased total stock.
The aggregate subscription price is P2,800,977,393, or P0.285 a share, higher than its part value of P0.25. Both parties agreed on the price after taking into account the potential growth of Basic Energy and findings from both firms’ legal, tax and financial due diligence.
M2DC is primarily engaged in real estate acquisition, development, and management; and in investing in real properties and acquiring shares of stocks of viable corporations to exercise rights of a shareholder.
Basic Energy has a 20-percent participation interest in the Iriga Geothermal Project, which is operated by Desco Inc. It also has a 15-percent equity in Vintage EPC Co. and VTE International Construction Co., which are registered in Thailand and the primary EPC contractors of a 220-megawatt solar power project in Minbu, Myanmar.
Basic Energy shares rose by 23 centavos or 48.94 percent to close at 70 centavos each on Wednesday.