SPNEC’s P2.8-B SRO fully subscribed

By James A. Loyola – September 8, 2022, 2:45 PM
from Manila Bulletin

Solar Philippines Nueva Ecija Corporation’s (SPNEC) P2.8 billion stock rights offering has been fully subscribed due to strong demand from its existing shareholders despite the challenging market conditions.

In a disclosure to the Philippine Stock Exchange, the firm said the 1.88 billion new common shares were fully subscribed in the first and second round of the SRO and Solar Philippines did not have to exercise its undertaking to mop up any unsubscribed share.

In light of the importance of the success of this SRO, Solar Philippines highlighted its commitment to ensure that the SRO is fully subscribed pursuant to the Principal Shareholder’s Undertaking, as provided in the SRO prospectus.

The P2.8 billion to be raised by from its ongoing stock rights offering will be a catalyst for its goal of expanding into a P400 billion renewable energy company with a total capacity of 10 gigawatts (GW).

“The SRO’s P2.8 billion proceeds will help complete the P10 billion that we plan to invest to complete the development of 10 GW of projects,” said Solar Philippines founder Leandro Leviste.

Solar Philippines Founder Leandro Leviste

Based on the industry standard cost of $700,000 per megawatt (MW) and revenue of P6 million per MW per year, 10 GW of projects would have a total non-land capital expenditure of $7 billion and annual revenue of P60 billion.

SPNEC points out that the $7 billion (about P400 billion) would be catalyzed by just a fraction of that in project development investment.

The firm is using a total of P10 billion (2.5 percent of the total P400 billion) in cash from various fund-raising activities to fund land acquisition and the cost of obtaining the necessary permits.

This will lead to the revaluation of the land as it will now be transformed into industrial land instead of agricultural. Once this is done, SPNEC will be able to attract partners who will put up the remaining 30 percent equity which will in turn qualify it for project financing of the balance of 70 percent.

“With just 2.5 percent initial equity, we should be able to retain an average of 50 percent across the entire portfolio,” said Leviste explaining that its existing and future partners usually get a stake of 50 percent plus one share or 50 percent minus one share.

The completion of SPNEC’s SRO would bring forward the asset-for-share swap of Solar Philippines, by increasing its public float ahead of the issuance of new shares to Solar Philippines in exchange for its portfolio of projects.

These projects include over 400 MW operating or under construction; the 3.5 GW solar, 4.5 GWh battery Terra Solar project; the 1.8 GW solar, 1.8 GWh battery Batangas Baseload project; and 1.8 GW of projects contracted under the Department of Energy’s Green Energy Auction.

With its Nueva Ecija solar project, these would potentially bring SPNEC’s contracted capacity to 8 GW scheduled to commence operations mostly between 2025 to 2026, which it estimates would be two-thirds of the total contracted renewable energy capacity of the Philippines.

“We see these corporate actions as being about more than just our company, but the energy mix of our country. We are thankful to our shareholders for supporting SPNEC and the renewable energy transition of the Philippines,” Leviste added.