Philippines’ First Gen might sell 116-MW Pantabangan-Masiway

Philippine power producer First Gen Corp. announced it might sell its 116-MW Pantabangan-Masiway hydroelectric complex as a way to help pay large foreign obligations and reduce foreign exchange losses.

First Gen President Federico Lopez said October 8 the company might borrow less than the US$700 million it needs from banks to refinance debt because of pricing difficulties and, instead, could sell some assets. Philippine News Agency said the company reported receiving purchase overtures from foreign and domestic investors.

“Our banks are still very supportive,” Lopez said. “Pricing is a little bit of an issue today but I think it’s still very doable.”

About US$400 million of the debt is due in November and the rest in 2009, officials said. The debt was incurred by First Gen’s US$1.35 billion purchase last year of a 60 percent stake in geothermal power producer Energy Development Corp. (EDC) and investment in a 1,000-MW gas-fired plant on Luzon Island.

The company is looking at selling some of its assets to pay down debt, including a 40 percent stake in a company that owns the First Gen holding in EDC and the 104-MW Pantabangan and 12-MW Masiway hydroelectric projects. First Gen acquired the sister hydro projects in Nueva Ecija Province for US$129 million in a 2006 privatization auction of National Power Corp. assets. (HNN 7/4/08)

“In this environment where it’s very tenuous globally we have to make sure that we can line up many other alternatives,” said Lopez.

The company earlier was looking at raising US$110 million in three-year bonds through its Unified Holdings unit.

“That’s still ongoing,” Francis Giles Puno, chief financial officer of First Gen parent First Philippine Holdings, said. “All of those are options being pursued.”

In February, First Gen’s First Gen Hydro Power Corp. awarded a US$47.1 million contract to VA Tech Hydro GmbH of Austria to perform major refurbishment and upgrade work at Pantabangan that would increase its capacity 18 MW.

First Gen also planned to invest in additional generating units at both plants, increasing Pantabangan by another 65 MW and Masiway by another 13 MW. First Gen also planned another 1-MW increase at Masiway through upgrades.

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