EDC in­de­pen­dent di­rec­tors de­scribe ten­der of­fer price as ‘fair’

Business World - - CORPORATE NEWS - Vic­tor V. Saulon

IN­DE­PEN­DENT di­rec­tors of En­ergy De­vel­op­ment Corp. ( EDC) de­scribed as “fair” the vol­un­tary ten­der of­fer price of P7.25 per share pro­posed by the lo­cal unit of a Dutch com­pany to ac­quire around 31.7% of the Lopez- led re­new­able en­ergy com­pany.

EDC sub­mit­ted to the stock ex­change a state­ment signed by its in­de­pen­dent di­rec­tors that cited a re­port of an in­de­pen­dent fi­nan­cial ad­vi­sors and a sep­a­rate fair­ness opin­ion re­port by an­other en­tity.

“Af­ter care­fully con­sid­er­ing the in­for­ma­tion avail­able to the Board, in­clud­ing the in­for­ma­tion set out above, we are of the view that the ten­der of­fer price of PREHC (Philip­pines Re­new­able En­ergy Hold­ings Corp.) is fair,” said EDC in­de­pen­dent di­rec­tors Francisco Ed. Lim, Edgar O. Chua and Manuel I. Ay­ala.

The state­ment, is­sued to EDC share­hold­ers, fol­lowed EDC’s dis­clo­sure on Aug. 3 that PREHC of­fered to buy through a ten­der of­fer be­tween 6.6 bil­lion and 8.9 bil­lion com­mon shares of the com­pany.

PREHC is a wholly owned sub­sidiary of Philip­pines En­ergy Mar­kets B.V., a com­pany or­ga­nized un­der the laws of the Nether­lands.

The sale is ex­pected to de­liver pro­ceeds of around P14 bil­lion to First Gen Corp., EDC’s par­ent firm which en­tered in the agree­ment with the bid­der.

EDC said the ten­der of­fer price rep­re­sents a 21.8% pre­mium over the last clos­ing share price of P5.95 per share on Aug. 2. It is also 21.5% higher than the three- month and six- month vol­ume weighted av­er­age price of the com­pany’s shares.

PREHC had en­gaged Punong­bayan & Araullo (P&A), an in­de­pen­dent fi­nan­cial ad­vi­sor and an af­fil­i­ate of Grant Thorn­ton, to give a fair­ness opin­ion on EDC even though a fair­ness opin­ion is re­quired only for manda­tory ten­der of­fers.

The ad­vi­sor placed the range of value of EDC’s com­mon shares that is fair from a fi­nan­cial point of view at be­tween P5.97 and P7.11 per com­mon share as of March 31, 2017. The ten­der of­fice price is above that range.

EDC said it had also hired BPI Cap­i­tal Corp. “to opine on the rea­son­able­ness” of the ten­der of­fer, the method­olo­gies and ap­proaches used by P&A.

It said BPI Cap­i­tal “has ex­pressed an opin­ion that... the var­i­ous ap­proaches and val­u­a­tion meth­ods ap­plied by P& A in de­ter­min­ing the fair value of EDC are rea­son­ably ap­pro­pri­ate.” It also said BPI Cap­i­tal’s con­clu­sion that “the com­pu­ta­tions car­ried out by P&A in the var­i­ous val­u­a­tion meth­ods... re­sulted in val­ues that are arith­meti­cally cor­rect.”

BPI Cap­i­tal also said the P5.97 to P7.11 per com­mon share of EDC is fair and that the P7.25 per share of­fer price of­fers a pre­mium of 2% to 21% over P&A’s range of val­ues.

Once com­plete, the deal will re­sult in EDC con­tin­u­ing to be con­trolled by First Gen, as it would re­tain a 60% vot­ing stake in the com­pany.

“The ten­der of­fer pro­vides First Gen with an op­por­tu­nity to re­al­ize part of its in­vest­ment in the coun­try’s largest re­new­able en­ergy com­pany,” the hold­ing firm pre­vi­ously said.

On Wed­nes­day, shares in EDC closed 2 cen­tavos or 0.29% up at P6.91 each, while those of First Gen added 32 cen­tavos or 1.8% to close at P18.12 each.

EDC also told share­hold­ers that PREHC will be owned and held by a con­sor­tium of in­vestors com­pris­ing funds man­aged by Mac­quarie In­fra­struc­ture Man­age­ment ( Asia) Pty Ltd. and Ar­ran In­vest­ments Pte Ltd., by up to 60% and 40%, re­spec­tively.

Red Vul­can Hold­ings Corp., a wholly owned sub­sidiary of First Gen, will not par­tic­i­pate in the ten­der of­fer and will con­tinue to hold the con­trol­ling in­ter­est in EDC.

First Gen and its wholly owned sub­sidiary North­ern Ter­ra­cotta Power Corp. are en­ti­tled to, and will par­tic­i­pate in the ten­der of­fer. They will ten­der a to­tal of 1,978,119,700 com­mon shares held by them, which col­lec­tively amounts to 10.6% of EDC. —

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