First Gen plans share issue to raise P10B

By Paul Anthony A. Isla, BusinessMirror

Posted at Jan 26 2012 07:09 AM | Updated as of Jan 26 2012 03:09 PM

MANILA, Philippines - Listed First Gen Corp. is hoping to raise between P5 billion and P10 billion via the issuance of preferred shares in the second half of the year.

Francis Giles Puno, First Gen president, said proceeds of the issuance will be used to fund either future growth or refinance maturing obligations in February next year.

Puno said the planned issuance will not bear interest savings unlike the previously issued P10-billion Series-F preferred shares which had an interest of 8 percent. Proceeds of that issuance were used to pay for maturing obligations that had an interest of more than 9 percent.

Emmanuel Singson, First Gen Chief Financial Officer, said the company already paid all maturing debts for the year and the only upcoming obligation is in February 2013.

The finance officer said maturing debts for next year amount to about $70 million in convertible bonds with a redemption value of about $90 million.

Puno also noted they expect this year to be better than last year.

He explained that the one-time, write-off for the Northern Negros geothermal power plant affected the financials of both First Gen and its geothermal arm, the Energy Development Corp. (EDC).

He said the main value driver will be EDC. "What we have done is we increased our economic ownership EDC to 47 percent as of end-2011. So hopefully as the Bacon-Manito geothermal power plant is completed and all the other plants of EDC like the Palinpinon and Tongonan are completely rehabilitated, then that should have a positive benefit on First Gen," he added. The Tongonan and Palimpinon plants are situated in central Philippines while Bacon-Manito is in the Bicol peninsula, southeast of Manila.

For the year, Puno also noted that the company’s priority projects are still focused on renewable energy. EDC and First Gen expect to pursue the wind projects and run-of-river hydroelectric plants, respectively.

Puno said the company is hopeful that the Feed-in Tariff (FIT) system for renewable energy projects will be passed this year.

“So for us, that’s our main focus, which is, saying that in terms of growth, we’re looking at renewable energy, and if the FIT is passed then through EDC, we’ll pursue wind, and through First Gen, we’ll pursue run-of-river hydropower plant projects,” he said.

Puno added that they are focused on developing this year two run-of-river hydro projects that are estimated to cost about P10 billion, as he pointed out that the construction of the two projects largely depend on the approval of the FIT system.

The hydropower projects will have a capacity to generate 20 to 30 megawatts of electricity and will be operational in three years.