Lopezes to sell minority stake in EDC to consortium for up to P14B

GREEN FUTURE. EDC's board of directors led by chairman Federico Lopez (rightmost) at its annual stockholders' meeting on May 8, 2017. File photo by Chris Schnabel/Rappler

GREEN FUTURE. EDC's board of directors led by chairman Federico Lopez (rightmost) at its annual stockholders' meeting on May 8, 2017.

File photo by Chris Schnabel/Rappler

MANILA, Philippines – Lopez-led power firm First Gen Corporation announced it is selling its minority stake in unit Energy Development Corporation (EDC), the country's largest renewable power producer, to a consortium, but it will still retain control.

First Gen and unit Northern Terracotta expect to gain around P14 billion from the sale of a 10.6% stake in EDC. 

The buyers are fund managers Macquarie Infrastructure and Real Assets (MIRA), and Arran Investment Pte Ltd, an affiliate of Singapore-based investment firm GIC.

In turn, the consortium, called Philippines Renewable Energy Holdings Corporation (PREHC), has offered to acquire 6.6 billion to 8.9 billion more common shares from the public through a tender offer.

"While there is a firm intention to delist the company voluntarily [post-transaction], the specific terms and procedures for delisting will be agreed at a later stage," PREHC said in the tender offer report to the Securities and Exchange Commission (SEC) on Thursday, August 3.

 

The tender offer, which represents an additional 36.5% stake in EDC, will run from August 10 until September 18.

This will effectively reduce public float to 12.5% from 49%.

With the recent mandate in the Philippine Stock Exchange to increase public float of listed firms to 15% effective July 1, 2017, EDC will likely be delisted soon. 

First Gen will retain its 40% stake in EDC through unit Red Vulcan's common share, while PREHC will have up to 47.5% of common shares. 

The Lopez-led group, however, will retain control of the renewable energy producer with its total voting stake of around 60%. The Lopez firm has preferred shares in EDC.

PREHC will be acquiring shares, including those from the tender offer, representing 23.5% to 31.7% of EDC's total voting stake.  

The deal is priced at P7.25 per share, a premium of around 22% over EDC's weighted average price of P5.93 in the last 30 days.  

"This is a clear vote of confidence in EDC's clean energy platform from two of the world's largest infrastructure investors. This will most definitely be a transformational period in the company's 40-year history," First Gen and EDC chairman Federico Lopez said in a statement. 

David Luboff, senior managing director of MIRA, said: "We recognize the value of shareholders' investment in EDC. The tender offer presents an opportunity for EDC shareholders to realize their investment at a premium to the current share price."

He added: "If successful, we look forward to forming a long-term partnership with First Gen to bring our experience and expertise to EDC."

EDC produces power from hydroelectric, wind, and solar power sources. It operates the plants that produce power from the world's second biggest source of geothermal energy, mostly in the province of Leyte.

EDC is a unit of First Gen, the power generating arm of First Philippine Holdings, which in turn is a unit of the Lopez family's listed holding firm Lopez Holdings.

MIRA is an infrastructure fund manager. – Rappler.com