Ayala, San Miguel advancing negotiations on Kauswagan plant sale

By Myrna M. Velasco – December 9, 2018, 10:00 PM
from Manila Bulletin

AC Energy Holdings, Inc. and the energy investment arm of San Miguel Corporation (SMC) are now reportedly in advanced talks at the negotiating table for the planned sale of the Ayala group’s 540-megawatt Kauswagan coal-fired power facility in Lanao del Norte.

ayala and san miguel

When asked on the pace of negotiations, AC Energy President and CEO Eric T. Francia just asserted that he cannot comment because they have a non-disclosure agreement.

Sources, nevertheless, indicated that San Miguel is now completing due diligence activities on planned acquisition of the Kauswagan plant – but it was not revealed if the conglomerate intends to buy the plant in totality or if it will just acquire substantial stake in the asset’s corporate vehicle.

Ayala’s AC Energy just confirmed recently that it is “in discussions with potential investors/partners for our thermal platform.”

It qualified that its fleet of coal-fired power assets, including the South Luzon Thermal Energy Corporation (SLTEC) in Batangas, which is its joint venture with PHINMA Energy and a Japanese partner; as well as its 540-megawatt Kauswagan coal plant, are still on offer to prospective partners.

“AC Energy is considering to sell as much as half of its thermal energy platform,” the Ayala firm has reiterated.

For the Kauswagan plant, San Miguel Corporation President Ramon S. Ang previously indicated to media that there has an offer and from then on, his energy team reportedly started looking seriously into prospects of acquiring the facility.

On continuing equity sell-down, AC Energy emphasized that “the move is meant to balance (its) renewables and thermal portfolios, as well as raise capital to support growth as the company expands in the region.”

Francia stressed that “while we grow our renewables exponentially, we shall continue to grow our thermal platform in the Philippines and around the region.”

The Ayala conglomerate recently unloaded bulk of its equity in the GNPower coal-fired plants on its Mariveles and Dinginin corporate vehicles to the Aboitiz group for a transaction worth $579.2 million.

The company’s total attributable capacity hovers at 1,600MW – spread across its thermal and renewables portfolios. Such scale of its operation raked in net profits of P593 million for the firm as of first quarter this year.

While beefing up its portfolio in the Philippine power market, the Ayala firm is also vigorously expanding in offshore markets – primarily in Vietnam, Indonesia and Australia.