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30 June 2011

Meralco acquires 2 Subic plants

MANILA — Manila Electric Company (Meralco) is acquiring a majority stake in an Aboitiz Power Corporation joint venture that is building two 300-megawatt independent coal-fired power plants in the Subic Bay Freeport Zone.

In separate disclosures to the Philippine Stock Exchange, the two firms said Meralco’s wholly-owned unit Meralco PowerGen Corporation will invest in Redondo Peninsula Energy, Inc. (RP Energy).

RP Energy is a 50-50 joint venture company formed by AboitizPower’s wholly owned subsidiary Therma Power, Inc. (TPI) and Taiwan Cogeneration International Corporation (TCIC) for the construction and operation of the proposed Subic Bay coal-fired power plant.

MPGC is expected to take a controlling interest in RP Energy, with TPI and TCIC will be diluted and end up equally owning the remaining stake of less than 50 percent.

Commercial operation of the proposed Subic Bay coal-fired power plant is projected to start in 2014. The plant is expected to augment the power supply of the Luzon Grid.

Meralco earlier said that its entry into power generation is part of its over-all strategy to assist in ensuring efficient, adequate and reliable electricity at cost-competitive rates.

The utility said that the potential partnership with TCIC and TPI will add to Meralco’s competitive electricity supply portfolio sourced from existing generating plants and from new highly efficient baseload, midmerit and peaking power plants, which MPG is putting up to meet customer requirements.

Meralco reiterated its commitment to existing long time and new customers in offering a wide range of valued products and services as a total energy solutions provider.

Meanwhile, in a separate disclosure, Meralco said it has priced P5 billion 7-year and 10-year fixed rate notes with a group of primary institutional lenders with The Hongkong and Shanghai Banking Corporation Limited acting as the sole lead manager and bookrunner.

The notes will be issued on June 29, 2011 with the proceeds from the facilities to be used to finance Meralco’s capital expenditures and for general corporate purposes.

The 7-year and 10-year notes were fixed at a yield of 6.2692 percent and 6.8900 percent respectively.

The notes fetched a credit spread of 20 and 21.12 basis points over the relevant respective 7-year and 10-year benchmark rates, the lowest priced by the investor market for a peso capital market transaction by a corporate issuer in recent history.

The notes issue was 2.35 times oversubscribed from the original announced issue size of P3 billion with books reaching P7.05 billion in orders, thus allowing Meralco to exercise its oversubscription option of P2 billion. (James A Loyola, Manila Bulletin)

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