Foreign funds buying into EDC
Through a tender offer, foreign investment funds will be acquiring up to 31.7 percent or an equivalent of 6.6 billion to 8.9 billion common shares of Lopez held Energy Development Corporation (EDC) valued at R14 billion.
The acquiring entity will be Philippine Renewable Energy Holdings Corporation, a consortium of foreign investment funds managed by Macquarie Infrastructure and Real Assets (MIRA) and Arran Investment Pte Ltd. (Arran), which is an affiliate of GIC, a Singaporean sovereign fund.
In a statement to the media, EDC’s parent firm First Gen Corporation indicated that it entered into an implementation agreement with bidder Philippine Renewable Energy Holdings for shares acquisition that will be consummated through a tender offer.
“Under the agreement, the bidder agrees to acquire through a tender offer, a minimum of 6.6 billion common shares up to a maximum of 8.9 billion common shares of EDC,” First Gen said.
It emphasized that such will account for 23.5-percent to 31.7 percent of the company’s total outstanding voting shares. The tender offer, which is priced at R7.25 per share, will yield R14 billion worth of proceeds to parent firm First Gen.
The shares divestment was priced at 22.3-percent premium based on the last 30-day weighted average of the company’s traded common shares at R5.93 per share, thus, it has been stressed that “the transaction is positive for shareholders of both EDC and First Gen.”
The Philippine Stock Exchange implemented a one-day suspension yesterday on the trading of the common and preferred shares of First Gen Corporation, as requested by the company, in light of a tender offer for the shares of subsidiary Energy Development Corporation.
The PSE said FGen made a request for voluntary trading suspension in view of the voluntary tender offer for common shares of stock of Energy Development Corporation to be conducted by Philippines Renewable Energy Holdings Corporation.
The suspension is to protect the investing public (including foreign shareholders in different time zones) by giving them sufficient time to study the impact of the tender offer on the company’s stock.
The trading suspension was implemented at 10:15 a.m. yesterday (August 3, 2017) and will be lifted at 9:00 a.m. today (August 4, 2017).
The Lopez firm explained that “First Gen benefits by agreeing to participate in the offer by tendering 10.6 percent of total outstanding common shares in EDC, subject to scale-back provisions under applicable regulations.”
The company assured that after this transaction, “EDC will continue to be controlled by First Gen as it will retain a 60-percent voting stake in the company.”
According to First Gen and EDC Chairman Federico R. Lopez, the deal “is a clear vote of confidence in EDC’s clean energy platform from two of the world’s largest infrastructure investors.”
He asserted that such will definitely serve as a “transformational period in the company’s 40-year history.”
For MIRA Senior Managing Director David Luboff, they opted for this deal as they “recognize the value of shareholders’ investment in EDC,” adding that “the tender offer presents an opportunity for EDC shareholders to realize their investment at a premium to the current share price.”
If the transaction closes successfully, he noted, that this shall cement “a long-term partnership with First Gen to bring our experience and expertise to EDC.”
Additionally, the Lopez group emphasized that “the tender offer provides First Gen with an opportunity to realize part of its investment in the country’s largest renewable energy company.”
EDC has been pursuing rehabilitation of some of its facilities so it can maximize megawatt-generation that it can commit to capacity off-takers. (With JAL report)