First Gen retains majority voting interest in EDC

Lopez-led First Gen Corp. will still retain a majority voting stake in Energy Development Corp. (EDC) even after its sale of a significant stake in the renewable energy firm to the consortium of investment fund managers under Macquarie Infrastructure and Real Assets (MIRA) and Arran Investment Pte Ltd of Singapore-based GIC.

In a disclosure yesterday, First Gen said its wholly owned subsidiary Red Vulcan Holdings Corp. and EDC have entered into a shareholders’ agreement with Philippines Energy Markets B.V. and Philippines Renewable Energy Holdings Corp. (PHREC) which sets out the agreement on the management of EDC.

Philippines Energy Markets B.V. is a private company based in the Netherlands and is the parent company of PREHC, which offered to buy up to 8.9 billion common shares of EDC for P7.25 each last August.

Red Vulcan did not participate in the tender offer and will retain its common and voting preferred shares which correspond to a 60 percent voting stake in EDC.

On the other hand, First Gen and subsidiary Northern Terracotta Power Corp. (NTPC) tendered their 992 million and 986 million shares, respectively.

Following the implementation of the scale back announced by PREHC, the tendered shares are 842,872,141 for First Gen and 838,244,082 shares for NTPC.

Upon completion of the tender offer, PREHC will own roughly 8.9 million common shares, representing approximately 31.7 percent of EDC’s outstanding voting shares.

The transaction will leave First Gen with a 40 percent economic stake in EDC but will retain a 60 percent voting stake.

Proceeds will flow back to parent firm First Gen, which intends to use it “to reduce debt and also use it for growth,” First Gen and EDC chairman Federico Lopez said earlier.

“Incoming investors wants the key management team to remain. Aside from being beneficial to us, the success of the tender offer is going to seal a strong partnership between First Gen with Macquarie and GIC,” Lopez said.

The prospective partners will bring in an experienced and credible partner to grow First Gen’s renewable energy platform.

However, their entry in EDC will bring down its public float level slightly above 10 percent, First Gen president and COO Francis Giles Puno said.