Meralco takes full control of Global Business Power

By Alena Mae S. Flores – December 23, 2020 at 07:50 pm
from manilastandard.net

Manila Electric Co. said Wednesday wholly-owned unit Meralco PowerGen Corp. will take full ownership of Global Business Power Corp. after acquiring an additional 86-percent stake for P34.466 billion.

Meralco said in a disclosure to the stock exchange Meralco PowerGen signed agreements with Beacon Powergen Holding Inc., a wholly-owned subsidiary of Metro Pacific Investments Corp. and JG Summit Holdings Inc., to transfer their respective shareholdings in GBP to Meralco PowerGen for P22.443 billion and P12.023 billion, respectively.

“With GBP’s operational experience of successfully running its own portfolio of generation assets, coupled with MGen’s own record of managing the first supercritical generation plant in the country, MGen will be better placed to focus on its plan to build its own generation portfolio, including an ambition to own at least 1 gigawatts in renewable energy capacity in five years,” said Meralco president Ray Espinosa.

Meralco PowerGen owns 51 percent of San Buenaventura Power Ltd. Co., the country’s first 455-megawatt supercritical coal-fired power plant in Mauban, Quezon.

The company also plans to put up around 1,000 MW of renewable energy projects and is developing a 1,200-MW ultra supercritical coal plant in Atimonan, Quezon.

Meanwhile, Meralco said the purchase price would be paid in installments: 60 percent at closing, 20 percent six months after and the remaining 20 percent after 18 months.

BEAHI holds a 56-percent ownership interest in GBP while JG Summit owns 30 percent interest. Meralco PowerGen owns the balance of 14 percent.

As a result of the transaction, Meralco PowerGen will own 100 percent of GBP, the leading power producer outside Luzon with gross capacity of 1,091 MW. The company has assets in the Visayas and Mindanao.

GBP has almost 30 power generation facilities spread across the Visayas and Mindoro with an more than 850 MW of coal and diesel powered generating capacity and more than 1.3 gigawatts for further expansion.

The main development project is a 670-MW super-critical coal-fired plant in La Union, Pangasinan.

GBP also has presence in Mindanao through its 50-percent interest in Alsons Thermal Energy Corp. which owns 2,105 MW units through Sarangani Energy Corp. and a potential expansion project under San Ramon Power Inc
The transfer is expected to deliver scale and operational synergy to both GBP and Meralco PowerGen and further enable these companies to provide ample and reliable supply of power to distribution utilities, electric cooperatives and other customers at competitive rates.

“This combination is a strategic one for MPIC as it presents opportunities in terms of promoting scale and operational efficiency while at the same time streamlining capital for MPIC’s other growth areas. Each of the two parties has complementary strengths and thus together can create a solid and unique platform for strategic growth.

The combined group will be in a strong position to respond to the needs of the country as the economy makes a strong rebound in 2021, with the now brighter prospect of available vaccines against the COVID-19,” said MPIC president and chief executive Jose Ma. Lim.

MPIC has an effective 45.46-percent ownership in Meralco, while JG Summit has a 29.56-percent stake.

“We are happy with how GBP has performed since our investment in 2016. The challenge now is how to further grow the business and take it to the next level. I am confident that combining this under Meralco where JG Summit is also a significant shareholder is the best way to achieve synergies and create further value,” said JG Summit president and chief executive Lance Gokongwei.

The transaction is subject to customary closing conditions, including regulatory and third-party approvals, and is expected to close within the first quarter of 2021, barring any unforeseen circumstances.

AlphaPrimus Advisors acted as financial advisor to Meralco and Meralco PowerGen with Picazo Law as its legal advisor.