SMC to borrow $1.3 B for Masinloc plant purchase

By Myrna M. Velasco – December 22, 2017, 10:01 PM
from Manila Bulletin

Diversifying conglomerate San Miguel Corporation (SMC) will be tapping the capital markets again next year for roughly $1.3 billion worth of fresh borrowings to finance its 630-megawatt Masinloc plant acquisition.

In an interview on the sidelines of the company’s R20-billion bond listing, SMC Chief Finance Officer Ferdinand K. Constantino said they will likely raise 70-percent of the $1.9 billion purchase price that SMC Global-Power Holdings, Inc. had tendered for the Masinloc asset.

“There are a lot of offers already. But we will work that out once we get the approval of the PCC (Philippine Competition Commission),” he said.

Constantino emphasized that the typical debt level they are pursuing for projects or asset buy would be at 70-percent; and settles the equity part from internally generated cash.

“Normally, it’s 70:30,” he said, referring to the debt-to-equity ratio of the financing for Masinloc plant’s purchase, albeit qualifying that “we can also be flexible.”

The Masinloc transaction was sealed last week via the signing of a share purchase agreement with Masin-AES Pte. Ltd., the equity holders of American firm AES Philippines Investment Pte Ltd and Gen Plus B.V.  Financial closing is anticipated early part of next year.

With the Masinloc acquisition, SMC Global Power Holdings’ power generation portfolio will be shored up to 4,153 megawatts – with its leading position still concretely cemented for the restructured electricity sector.

SMC Global Power General Manager Elenita D. Go said that ramped up capacity will already include the expansion of the Masinloc plant at 335MW as well as the 10MW battery storage facility that has been integrated into the asset.

The capacity expansion, she said, will be on stream by year 2019 – serving then as capacity addition to the growing electricity needs of the interconnected Luzon and Visayas grids.

Meanwhile, on the R20-billion bond offer of the company, the most immediate debt refinancing they will settle is that of the $500-million borrowings of Petron Corporation for its upgraded Limay refinery.