MPIC borrows billion to pay Beacon Electric’s debt
Metro Pacific Investments Corporation (MPIC) has secured an R8-billion loan to partially finance the redemption of the outstanding debt obligations of wholly-owned subsidiary Beacon Electric Asset Holdings, Inc. which holds its investment in Manila Electric Company Meralco).
In a disclosure to the Philippine Stock Exchange, MPIC said it has signed a 10-year and 15-year syndicated term loan facility and has engaged BDO Capital & Investment Corporation as arranger and bookrunner.
MPIC had raised its interest in electricity distributor Meralco and power generation firm Global Business Power Corporation by buying out the shares held by the PLDT group for R21.8 billion last June.
PLDT Communications and Energy Ventures’ (PCEV) divestment of its remaining 25 percent stake in Beacon Electric Asset Holdings allows the PLDT group to focus on its core businesses while enabling the First Pacific group to simplify and consolidate its power industry investments in MPIC.
Beacon Electric owns 35 percent of Meralco and 56 percent of Global Business Power. Upon completion of the transaction, MPIC continues to own a direct 10.5 percent interest in Meralco and — through its 100 percent interest in Beacon Electric — raised its effective ownership interest in Meralco to 45.5 percent from 41.2 percent and in Global Power to 62.4 percent from 47.8 percent.
In order to fund the investment, MPIC placed out 4.5 percent of its direct shares in Meralco for R12.67 billion.
The deal allows MPIC to settle R12 billion of the purchase price in cash and the balance of R9.8 billion over the next four years.
Meralco is the biggest electricity distributor in the Philippines while Global Power is the leading power supplier in Visayas with 852 megawatts of coal- and diesel-powered generating capacity.
PCEV is a holding company owned 99.9 percent by Smart Communications, Inc., which, in turn, is a wholly owned subsidiary of PLDT. It invested in Meralco and Beacon Electric in 2009 a total amount of R24 billion.
Over the years, PCEV received R14.7 billion in cash dividends and completed its divestment for total consideration of R51.6 billion or about 2.75 times its invested capital. (JAL)