Meralco PowerGen Corporation (MGen), the power generation investment subsidiary of Manila Electric Company (Meralco) has completed the acquisition of the shareholdings of affiliate firm Global Business Power Corporation (GBP) on March 31 this year, according to Meralco executives.
To partly fund the merger and acquisition (M&A) deal which was valued at P34.466 billion, Meralco Chief Finance Officer Betty Siy-Yap disclosed that P22 billion worth of loans had been secured from two banks – BDO and the Philippine National Bank.
She qualified that parent firm Meralco tapped P5.0 billion of the required borrowings for the acquisition; while MGen secured bigger loan chunk of P17 billion with PNB.
“Meralco and MGen drew a five-year term loan amounting to P5.0 billion and P17.0 billion bridge loan, respectively, to cover the first installment of the GBPC purchase price of P19.6 billion. The balance of the installments is payable up to September 2022,” Yap said.
The PNB loan, in particular, she indicated is “a short term loan maturing in April 2021, but extendible for another 2 months but after which, there will be a long-term loan to cover that one.”
Following the completion of the GBPC purchase, Meralco President and CEO Ray C. Espinosa emphasized that “the first step is to re-integrate the two companies and come up with one functional organization for our power generation – and that would mean that we will streamline our pipeline of projects, so that it becomes a more coherent and more focused pipeline.”
He noted that there could be changes in management, but he has not specified yet the pace of corporate restructuring that shall be fleshed out in the re-integrated power generation firms.
“On both sides, I would say that the pipeline of MGen is actually quite a lot and very interesting as well as those of GBPC. I think we’re happy that we have a much bigger pipeline of projects, particularly focused on renewables,” Espinosa asserted.
He added “the projects in the pipeline are projects that have been vetted already and will be pursued,” hence, the facet of streamlining, will be “more about hunting for more projects that would have to be sort of synergized between the two companies so we’d have one development outlook.”
As previously disclosed, the stake acquisition by MGEN was carried out through the transfer of the shareholdings of Beacon Powergen Holding Inc. (BEAHI), a wholly-owned subsidiary of Metro Pacific Investments Corporation (MPIC); and that of JG Summit Holdings Inc of the Gokongwei group.
The purchase price of the transferred BEAHI shareholdings had been pegged at P22,443,400,000.00 – and that accounted for the 56-percent equity of the MPIC subsidiary in GBP.
For the JG Summit shareholdings, the transaction amounted to P12,023,250,000.00 for the 30-percent ownership of the Gokongwei firm in Global Power.
“As a result of the transaction, MGEN will own 100-percent of GBP,” its parent-firm Meralco has stipulated in its disclosure to the Philippine Stock Exchange in December last year.
It was specified that the purchase price “shall be paid in installments based on the following schedule: 60-percent shall be paid on closing; 20-percent will be paid six (6) months after; and the remaining 20-percent will be paid after 18 months.”
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