Philippine Aboitiz Power with US$ 62 million bond offer

Alexander Richter 7 Mar 2009

Aboitiz Power Corp. issuance of up to P3 billion (US$ 62 million) worth of fixed-rate bonds has been approved by the SEC in the Philippines.

Locally reported, The Securities and Exchange Commission has approved Aboitiz Power Corp.’s issuance of up to P3 billion (US$ 62 million) worth of fixed-rate bonds. Based on documents filed with the SEC, the bonds will be issued in two maturities – three years and five years – at 100-percent face value.

BDO Capital & Investment Corp., BPI Capital Corp., First Metro Investment Corp. and ING Bank N.V. are the joint lead managers and underwriters for the issue. Proceeds from the bond offer will be used to partly fund Aboitiz Power’s 40-percent downpayment for its acquisition of the Tiwi-Makban geothermal facilities amounting to $178 million due on May 25.

The balance of the total $447-million purchase price may be paid via deferred payments within a period of seven years from closing date of the asset purchase agreement, Aboitiz Power said.

It added that part of the downpayment will be also be sourced from a combination of internally-generated funds, proceeds of a corporate notes offer last December and short-term credit line facilities.

The company expects to infuse additional capital of about $80 million into AP Renewables Inc., which is in the process of developing a rehabilitation plan for the Tiwi-Makban facilities. Based on initial estimates, the refurbishment costs could reach $150 million over a period of four years.

The rehabilitation plan is expected to improve the geothermal plant’s operating capacities, Aboitiz Power said.In the nine months ending September 2008, Aboitiz Power posted a net profit of P3.17 billion, up 35 percent from the previous level of P3.17 billion due to the strong growth of its power generation business.

Its power generation business earned P1.99 billion, representing a 66-percent increase from last year’s P1.2 billion, mainly due to the incremental earnings contribution from 2007 acquisitions, particularly from the 232-megawatt STEAG coal power plant in Mindanao. Total power sold increased 130 percent from 566 gigawatt-hours to 1,300 gwh.

Improved capacity factors for the hydro plants due to higher rainfall also led to the improvement in power generation, Aboitiz Power said.