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Lopez led First Philippine Holdings preparing to join privatization of geothermal plants

Alexander Richter 25 May 2009

Lopez-led First Philippine Holdings, Inc. plans to trim its debts by half this year, putting it in the position to join more auctions for government-owned plants, particularly geothermal facilities.

Reported in the Philippines, “Lopez-led First Philippine Holdings, Inc. plans to trim its debts by half this year, putting it in the position to join more auctions for government-owned plants, particularly geothermal facilities.

This comes after the sale of the Lopezes’ 20% stake in power distributor Manila Electric Co. for P20 billion, and executives said the company is also open to selling the remaining 13.4% stake.

At the sidelines of the First Philippine Holdings’ annual stockholders’ meeting, President and Chief Operating Officer Elpidio L. Ibañez said the company plans to reduce debt to $150 million to $200 million this year.

“With the sale of the Meralco stake, we will be able to close with that,” Mr. Ibañez said, explaining that the company used half of the P20.07 billion from the sale of the 20% stake in Meralco to the PLDT group led by Manuel V. Pangilinan to trim debts.

The company has been selling its assets to bring down its debts, particularly from the acquisition of geothermal producer Energy Development Corp. from the government last November.

Last year, First Philippine Holdings sold its stake in First Philippine Infrastructure Inc., operator of the North Luzon Expressway, to Pangilinan-led Metro Pacific Investments Corp. for P12 billion.

First Philippine Holdings Chairman Oscar M. Lopez said the sale was necessary as part of the Lopezes’ “defense in their investment in Meralco” since increasing their stake in the country’s largest electricity distribution utility cost them P19 billion.

F. Giles B. Puno, First Philippine Holdings’ chief finance officer, said the company’s target is to join the privatization of the geothermal plants, but did not elaborate.

The Power Sector Assets and Liabilities Management Corp. earlier this month formally opened the combined sale of the 192.5-megawatt (MW) Palin-pinon and 112.5-MW Tongonan geothermal power plants, which is due to be auctioned by the government in August.

Mr. Ibañez said the company is also open to selling its remaining stake in Meralco, which is valued at P15 billion.

“The remaining stake puts us in a good position to either keep or sell it. If there are attractive opportunities … Meralco remains open. The company has a right of first refusal with the Pangilinan group,” he said.

But selling Meralco is not a priority since the focus would be on participating in state auctions. Even if there is an offer, the Lopezes will likely hold on to the stake especially now that performance-based rate-setting has been approved, Mr. Ibañez said.”

Source: Business World Online