EDC raising P5 billion for 2016 capex needs

by Madelaine B. Miraflor – June 28, 2016

from Manila Bulletin

Energy Development Corporation (EDC), the world’s second biggest geothermal power producer, has activated its plan to raise P5 billion this year in order to fund portion of its 2016 capital expenditure as well as pay some of its debt.

A document filed to the Philippine Stock Exchange on Monday showed that the Lopez-led firm had executed a loan agreement with Union Bank of the Philippines for the total amount of P5 billion.

Nestor Vasay, EDC chief financial officer, said in a text message that the “the R5-billion loan is meant to cover two things for the company” including its remaining capital expenditure (capex) requirement and loans that are maturing this year.

Vasay already said in March that EDC may raise as much as P5 billion through loans.

Asked if the company is planning more fundraising activities for this year, he only said “it will depend on the realization of certain projects that we are currently pursuing”.

For this year, EDC alloted as much as P14 billion in capex this year to improve the reliability of its existing power plants and expand its portfolio in renewable energy.

Bulk of this capex is expected to go to the refurbishment of its existing plants like the Tongonan Geothermal Plant.

The company had claimed that its 2015 revenues fell short of target primarily due to reliability issues at the Tongonan Geothermal Plant.

“The focus really is in Tongonon because last year, it costs us about P700 million in foregone revenues when it went down last year for six months so we want to put investments on that to boost its reliability,” Richard Tantoco, EDC president and chief operating officer earlier said.

For that alone, Tantoco said EDC would be investing around P4.3 billion and the refurbishment would take about almost half a year to finish.

Nevertheless, he made sure that while the company does that, it also will not stop with its existing expansion plan.