AboitizPower to issue P15 billion in bonds by Q4

ABOITIZ Power Corp. (AboitizPower) will be issuing P15 billion worth of fixed-rate bonds by the fourth quarter of this year to refinance existing debt.

In a disclosure to the stock exchange on Wednesday, AboitizPower said the bond issuance will consist of a base size of P10 billion, with an oversubscription option of up to P5 billion, with tenors of 5.25 years and 10 years.

AboitizPower looks to use the proceeds of the issuance to refinance the term loan of subsidiary Therma Power, Inc., previously used to partially fund the acquisition of GNPower Mariveles Coal Plant Ltd. Co. in December 2016. Part of the proceeds will also be used to repay short-term loan obligations and for general corporate purposes.

The listed firm appointed BDO Capital Corp. as the offering’s issue manager and, together with BPI Capital Corp. and United Coconut Planters Bank, as the joint lead underwriters. BDO Unibank, Inc. Trust & Investments Group will serve as the trustee.

The bonds will be listed at the Philippine Dealing & Exchange Corp.

The offering will be taken from the company’s shelf registration at the Securities and Exchange Commission of up to P30 billion. AboitizPower had already issued P3 billion worth of bonds from the shelf registration last year.

Local debt watcher Philippine Rating Services Corp. (Philratings) gave the issuance a PRS Aaa rating, the highest in its credit rating scale. This indicates that the bonds are of the highest quality with minimal credit risk, while the issuer’s capacity to meet its financial commitment is extremely strong.

The rating has also been assigned a stable outlook, which means it is unlikely to change in the next 12 months.

Philratings considered AboitizPower’s cash flow and financial flexibility, adequate capital structure, diversified portfolio, and experienced management system in coming up with the rating.

“The company’s operations consistently produce strong levels of cash flows, especially in relation to debt service requirements. The continuously growing and inelastic demand for power likewise serve to temper the volatility in the company’s cash flows,” Philratings said in a statement.

As for the AboitizPower’s capital structure, Philratings noted its debt to equity ratio stood at 1.66x while capitalization ratio was at 65.7% by the end of 2017.

“The company continues to maintain a healthy capital structure, with yearly increases in retained earnings supporting equity levels,” Philratings said.

Incorporated in 1998, AboitizPower has core interests in hydroelectric, geothermal, solar, coal-fired, and oil-fired power plant with a net sellable capacity of 3,175 megawatts (MW) as of the first half of 2018. The company also has eight distribution utilities under its portfolio, servicing 254 customers with a contracted capacity of 927 MW.

AboitizPower is slated to add 309 MW of attributable net sellable capacity in the second half of 2018, once it completes its hydro and baseload power plant projects in Visayas and Mindanao.

The company reported a net income attributable to the parent of P9.12 billion in the first six months of 2018, six percent lower than the P9.72 billion it posted in the same period a year ago. Gross revenues went up by 15% to P65 billion during the same period.

Shares in AboitizPower slipped 50 centavos or 1.35% to close at P36.50 each at the stock exchange on Wednesday.