MPIC expands power assets after buying controlling stake in GT Capital Holdings

by VG CabuagMay 27, 2016

from Business Mirror

CONGLOMERATE Metro Pacific Investments Corp. (MPIC) on Friday expanded its power assets by acquiring a controlling stake in GT Capital Holdings Inc.’s Global Business Power Corp., a company with power assets in the Visayas and parts of Luzon.

MPIC and GT Capital made a series of transactions, which essentially was a share-swap agreement, according to officials of both companies.

In return for the controlling stake in the power company, the Ty family’s holding firm will own a minority stake in MPIC and will become its second-largest investor.

Both MPIC and GT Capital halted their trading on Friday as a result of the deal.

MPIC, through its associate Beacon Electric Asset Holdings Inc., will acquire 56 percent of Global Power for P22.06 billion. Half of the amount, or P11.03 billion, will be settled in cash upon closing the deal, and the remaining will be settled via a vendor-financing facility.

Beacon holds the power assets of MPIC. “I am delighted to announce this new alliance with the GT Capital Group. This investment has strengthened MPIC’s finances and, together, we will work to accelerate our investment in, and development of, the infrastructure of our country,” MPIC Chairman Manuel V. Pangilinan said.

As part of the transaction, GT Capital is buying new 3.6 billion common shares of MPIC at P6.10 apiece, for a total price of P21.96 billion. The price is equivalent to about 11.4 percent of the enlarged capital base of MPIC.

GT Capital still needs approval by the Securities and Exchange Commission, but already received shareholders’ approval last year.

GT Capital purchased the shares at a premium, as it was trading at the Philippine Stock Exchange at P6.02 per share.

At the same time, the Ty family’s holding firm will further acquire an additional 1.3 billion shares from Metro Pacific Holdings Inc. (MPHI), MPIC’s majority shareholder, at a purchase price of P6.10 apiece, or P7.9 billion. These will then increase GT Capital’s holdings in MPIC to 15.6 percent.

MPHI will subscribe to the 4.1 billion newly issued class A voting preferred shares of MPIC at par value for a total price of P41.3 million.

Following these transactions, MPHI will continue to hold an overall majority capital at 55 percent and GT Capital at 12.1 percent.

“It was MPIC looking at the Global Power investment. But through the discussions, it became a win-win for both. Global Power is now part of MPIC, who’s a very big force in the energy-generation field, so it was a very big fit. So GT Cap allowed us to look at the different facets of the Philippine economy in terms of infrastructure,” Alfred Ty, GT Capital co-vice chairman, said at the sidelines of MPIC’s annual stock holders’ meeting on Friday.

Ty is currently an independent director at MPIC. Officials said MPIC discussions are still ongoing, but MPIC may control the Ty’s power assets over the weekend.

Meanwhile, MPIC officials said proceeds of the deal, valued at about P29.9 billion, will be used by MPIC to raise its stake in power distributor Manila Electric Co. (Meralco) by acquiring the remaining stake of Philippine Long Distance Telephone Co. (PLDT), which owns 17.4 percent.

Based on current share price of Meralco at P301, those PLDT holdings are worth about P60 billion.

“From a PLDT perspective, my view is PLDT investment in Meralco made in 2009 has already ripened, and time has arrived for PLDT to consider [selling it]. To maintain our control with Meralco, part of shares of PLDT in Meralco should be sold at the right price,” Pangilinan said, adding they purchased the Meralco stake in 2009 at P90 per share.

Global Power is the leading power supplier in the Visayas, with an aggregate 852 megawatts of coal- and diesel-powered generating capacity at present, including 150 MW to commence operations later this year.

The main development project is a 670-MW supercritical coal-fired plant in La Union and Pangasinan, with a 600-megawatt electric purchase-power agreement signed with Meralco.

The investment in Global Power will be immediately accretive to the earnings of Beacon Electric.