Aboitiz unit to raise P1.4 B from debt market

A unit of Aboitiz Power Corp. plans to raise P1.4 billion from the debt market.

Hedcor Sibulan Inc.’s planned debt issuance was assigned a credit rating of PRS Aa plus by the Philippine Rating Services Corp.

Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is very strong. PhilRatings may add either a ‘plus’ or ‘minus’ sign to further qualify its ratings.

Philratings likewise assigned a Rating Outlook of Stable to the assigned issue credit rating.

It took into account Hedcor’s track record and substantial experience of its management and technical personnel, its relatively stable profitability profile, and healthy liquidity.

The rating also considered the operational history of the company, concentration risk from having only one customer and having all its assets located within the Davao region; as well as limited growth prospects.

Hedcor is a special purpose company tasked to develop, construct and operate three run-of-river hydroelectric power plants in Barangay Sibulan, Sta. Cruz, Davao del Sur, harnessing water from the Sibulan River and Baroring Creek which runs through Mt. Apo and other adjacent mountains.

The company’s power plants are Sibulan Hydro A which has a 16.5 megawatt capacity, the 26 MW Sibulan Hydro B MW and the 6.6 MW Tudaya Hydro 1. Overall, Hedcor has a 49.1 MW capacity.

The Aboitiz Group has been involved in the power industry for almost 98 years and has interests in some of the largest privately-owned distribution utilities in the Philippines.

For the period 2011 to 2014, Hedcor was able to increase its sale of power, recording a compound annual growth rate of 8.6 percent.

The company is eligible for an income tax holiday for the operations of its hydro plants.

From 2010 to 2012, the company maintained a debt level of around P3.2 billion.

During such time, debt to equity level, liabilities to capitalization and solvency ratio averaged 1.6 times, 61.1 percent and 1.7 times, respectively, which are considered manageable.

Hedcor extinguished all of its debt by issuing preferred shares beginning 2013.

“From the issuance of the proposed debt until its maturity, the company’s capitalization is seen to remain manageable and will continue to improve as debt is repaid and retained earnings are beefed up, “PhilRatings said.