By MYRNA M. VELASCO
The value of the 112-megawatt Pantabangan-Masiway hydropower assets of First Gen Corporation due for divestment to affiliate firm Energy Development Corporation (EDC) already climbed to $240 million from the acquisition price of $129 million for the same assets from the Power Sector Assets and Liabilities Management Corporation two years ago.
The valuation figure was provided by Punongbayan & Araullo, a financial advisor for the transaction and was disclosed to the Philippine Stock Exchange (PSE) by both First Gen and EDC.
It was learned that the appraised value of the hydro assets is now higher because the Lopez group already made some refurbishments that enhanced the operating efficiencies of the two plants.
EDC has offered to buy 60-percent stake in First Gen Hydro Corp., the corporate vehicle for the Pantabangan-Masiway plants, for $105 million; a deal which is targeted to be consummated by the end of the year.
According to Punongbayan and Araullo, the valuation was based on the term sheet agreed upon by EDC and First Gen.
“This is below the range of values we have derived amounting to $262.9 million to $312.4 mullion,” the advisory firm said.
It added that the lower enterprise value drawn in the term sheet “is favorable to EDC from a financial point of view.”
Meanwhile, First Gen vice president Victor Santos Jr. has stipulated in a disclosure to the local source that the proceeds from the transaction “will be utilized by First Gen for its general corporate purposes, including satisfaction of the company’s maturing obligations.”
On the part of EDC, this will be its window “to expand its renewable power generation projects jointly with First Gen.”
All terms in this $105-million transaction will be contained in the Share Purchase and Investment Agreement (SPIA) to be signed by the parties.
These shall include the terms and conditions of the transaction; and the terms and nature of payment or settlement method..
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