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EDC plans bond issuance to raise $170 million

EDC plans bond issuance to raise $170 million Drilling rig of EDC in the Philippines (source: EDC)
Alexander Richter 11 Mar 2013

Energy Development Corp. is planning bond issuance of $170 million in fundraising effort for a wind project and drilling of additional geothermal wells.

In the Philippines, Energy Development Corp., has filed for regulator’s approval to proceed with the issuance of fixed rate bonds next month to raise up to P7 billion ($170 million). This fundraising effort is to provide working capital for a wind project and drilling of additional wells at  company’s geothermal projects.

In the filing with the Securities and Exchange Commission, “EDC said it will be offering P5 billion  ($123 million) worth of fixed rate bonds due seven years and ten years from issue date, with an oversubscription option of up to P2 billion ($49 million).

The Lopez affiliate has tapped BDO Capital and Investment Corp. as issue manager and sole bookrunner for the said transaction.

Depending on whether EDC is able to raise P5 billion or P7 billion from the said issuance, the geothermal firm is looking to allocate roughly P3 billion to P5 billion of the proceeds for its 87-megawatt Burgos wind power project, and another P1 billion to P2 billion for the drilling of new wells, the workover of existing wells and investments for other geothermal projects.

The Philippine Rating Services Corp.(PhilRatings) recently assigned an issue credit rating of PRS Aaa for EDC’s proposed bond issuance, which means that these bonds are of the highest quality with minimal credit risk.

The borrower’s capacity to meet its financial commitment on the obligation is also extremely strong, the credit watchdog had explained.

For this year, EDC has beefed up its investments to P32 billion ($785 million) to fund the construction of priority power projects.

Roughly P11 billion ($270 million) will be spent this year for the construction of the wind farm in Burgos, Ilocos Norte, while the rest of the amount or P22 billion ($540 million), will be spread out for the activities of other geothermal projects that the company is pursuing, which included the drilling of wells, rehabilitation and the transfer of the 49-MW Northern Negros geothermal power plant (NNGP) to Nasulo, Negros Oriental from its original site in Negros Occidental.”

Source: Business Inquirer