Ayala acquires Phinma Energy

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By Victor V. Saulon, Sub-editor

AC ENERGY, Inc. is taking control of Phinma Energy Corp. through a “mutually strategic agreement” that gives the Ayala-led company a 51.48% stake in the listed energy firm for P3.42 billion.

In a joint statement on Wednesday, the two groups said the Ayala’s energy platform will acquire the combined stake of Phinma Corp. and its parent Philippine Investment Management, (Phinma) Inc. in Phinma Energy subject to regulatory approvals.

Jaime Augusto Zobel de Ayala, chairman and chief executive of Ayala Corp., described the Phinma group as “one of our early partners when Ayala was new to the power sector.”

“This partnership has prospered over the last eight years and we welcome the opportunity to now integrate Phinma Energy into AC Energy’s platform as we grow our presence in the power generation sector,” he said.

Ramon R. del Rosario, Jr., Phinma president and chief executive, said the two groups “have always enjoyed a strong partnership, making this agreement a welcome culmination of our joint initiatives in the energy sector, as we believe AC Energy is best-positioned to grow the business and take it to the next level.”

Mr. del Rosario said Phinma will now focus on its education and construction materials business.

The agreement, which was approved by both groups on Tuesday, involves the sale by listed holding firm Phinma Corp. of its 1,283,422,198 shares or 26.25% in Phinma Energy for P1.75 billion based on the unit’s implied 100% equity value of P6.65 billion. The shares will be sold through the stock exchange.

Phinma Corp. and its parent will then cause Phinma Energy to approve the issuance of 2,632,000,000 in new shares, to which AC Energy will subscribe.

Parent firm Phinma will also sell its 25.23% interest in the energy subsidiary.

“The estimated proceeds from the sale in the amount of P1.7 billion will be used to focus investments in other sectors such as education and construction materials as opportunities arise,” Phinma Corp. said.

The groups said the valuation date was as of Dec. 31, 2018 and is subject to adjustments.

The transaction will result in a loss on sale of P368 million subject to adjustments but will allow Phinma Corp. to avoid significant losses from the energy business in the future, it said.

The deal’s closing is subject to the satisfaction of certain conditions, such as regulatory approvals, including the approval of the Philippine Competition Commission, and compliance with applicable tender offer requirements.

AC Energy and Phinma Energy first teamed up in 2011 when they developed, built and started operating the 244-megawatt (MW) net capacity coal power plant in Calaca, Batangas under South Luzon Thermal Energy Corp.

Eric T. Francia, AC Energy president and chief executive, said the transaction was an “important step” for the company in hitting its 5-gigawatt (GW) renewable energy installation target by 2025.

He said the Phinma Energy platform “has significant operating and developmental renewable energy assets, and its large diesel capacity will complement the scaling-up of our renewable projects.”

Sought for comment, Luis A. Limlingan, business development head at Regina Capital Development Corp., said the deal is indeed an important step for AC Energy to achieve its target energy capacity.

On AC Energy’s possible entry into the stock market, he said: “That may be one angle to look at as a possible backdoor listing but does not seem likely yet.”

On Wednesday, shares in Phinma Corp. rose 1.21% to close at P8.99 each, while those of Phinma Energy gained 8.46% to end the trading day at P1.41 each.

AC Energy owns around 1.7 GW of generation capacity in operation and under construction based on its equity interest in power generation businesses. It generated 2,800 GW-hours of energy last year, of which 48% was from renewable sources, the company said.

Phinma Energy has an attributable generation capacity of 472 MW. It is the third-largest stand-alone retail electricity supplier serving 378 MW of customer demand.

It holds interests in the following entities: Phinma Power Generation Corp. (100%); Phinma Renewable Energy Corp. (100%); CIP II Power Corp. (100%); One Subic Power Generation Corp. (100%); One Subic Oil Distribution Corp. (100%); Phinma Solar Corp. (60%); Phinma Petroleum and Geothermal, Inc. (50.74%); Palawan Exploration and Production Corp. (30.65%); South Luzon Thermal Energy Corp. (45%); and Maibarara Geothermal, Inc. (25%).