EDC pays up debt of US$245m nominated in Yen

Palinpinon geothermal plant, Philippines (source: Commons/ Wikimedia)
Alexander Richter 28 Jun 2010

In order to overhaul mix of its loan portfolio, EDC is repaying debt worth US$245 nominated in Yen, trying to decrease vulnerability to forex translation losses.

“Philippine “Energy Development Corp., the renewable energy unit of First Gen Corp., will settle today its 22-billion yen debt (approximately $245 million), moving the company closer to overhauling the currency mix of its loan portfolio.”, so local news from the Philippines.

According to those news, “Energy Development said yen-dominated loans after the payment would now account for just 13 percent of the company’s foreign debt from 87 percent and 40 percent reported in 2008 and 2009, respectively.

“Our investors have singled out the predominance of Japanese yen-denominated debt as a major concern because of our vulnerability to forex translation losses,” said Energy Development president and chief operating officer Richard Tantoco. “Since taking over in 2008, we have fully addressed this concern with the successful re-denomination of our debt stock to one that is now predominantly peso, or 66 percent of total loans,” he said.

Tantoco said the company’s income statement would now be more predictable because of reduced foreign exchange fluctuations and lower reliance on yen debt.

The company had successfully hedged the yen exposure of the entire maturity of the 22-billion yen loan against the US dollar during the first half of the year, resulting in gains of P181.1 million.

The Japanese loans obtained from the Miyazawa package was among the debt incurred by then state-owned PNOC Energy Development Corp.

The company used the proceeds of the loan to fund investments and working capital requirements shortly after the Asian financial crisis.

Energy Development recently secured a syndicated loan worth $175 million to finance general operations.

It signed a three-year syndicated term loan facility with ANZ (Australia and New Zealand Banking Group Ltd.) Manila Branch, Credit Agricole Corporate and Investment Bank and Standard Chartered as lead arrangers and book runners.

Energy Development will use proceeds of the loan to finance operations and refinance and repay maturing loan obligations.

The company posted a P3.80-billion net income in the first quarter this year, up 68 percent from P2.27 billion year-on-year.

Two units—Green Core Geothermal Inc., operator of the 192.5-megawatt Palinpinon and 112.5-MW Tongonan I geothermal power plants, and First Gen Hydro Power Corp., operator of the Pantabangan and Masiway hydroelectric plants—contributed P1.22 billion to the income.

Energy Development remains the largest producer of geothermal energy in the Philippines to date, accounting for 62 percent of installed capacity.”

Sourc: Manila Standard