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Ayala unit expects to sign Phinma Energy deal soon

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AC Energy, Inc. expects to sign in a few days the definitive agreement to acquire the majority stake in Phinma Energy Corp. to move the deal forward for approval by the antitrust watchdog ahead of the “specific strategies” for the acquired assets, including a stalled liquefied natural gas (LNG) import terminal, its top official said.

“We expect to sign the definitive documents fairly soon, within the next few days, so that’s the next step and then soon after that we will file for PCC (Philippine Competition Commission) approval,” Eric T. Francia, AC Energy president and chief executive officer, told reporters.

Mr. Francia said the company expects to complete the deal for Phinma Energy by mid-year.

“So we’re probably looking at the middle of the year — May, June, July maybe, that area — in terms of getting PCC regulatory approval and then we have to make the mandatory tender offer, which typically takes 90 days,” he added.

On Jan. 9, AC Energy announced that it had signed a “mutually strategic agreement” with Phinma Energy that gives the Ayala-led company a 51.48% stake in the listed energy company for P3.42 billion.

Mr. Francia said PCC takes about 60 to 90 days in approving a project before it moves to a second phase of approval process that takes another 60 days or so.




“It will really depend on the results of the tender offer because if no one tenders, the minimum that AC Energy would effectively be guaranteed is around 68%. That’s how the deal was structured,” he said.

The deal calls for 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 P6.7 billion.

Phinma Corp. and its parent Philippine Investment Management (PHINMA) Inc. will then prompt Phinma Energy to approve the issuance of 2,632,000,000 in new shares, to which AC Energy will subscribe. The parent firm will also sell its 25.23% interest in the energy subsidiary.

Mr. Francia said the resulting stake of AC Energy after the subscription to the new share could reach 68%, “and then on top of that as and when the public tenders, that 68% can go up.”

He declined to say how the deal would result in beefing up the installed energy capacity attributable to the company, citing the pending approvals.

“Phinma Energy is about a little over 400 megawatts (MW) on a 100% basis, so it really depends on how much Phinma Energy we will get, post tender offer,” he added.

Asked about the pending LNG project of Phinma Energy, Mr. Francia said: “We will study that. We’ve always been keeping our minds and eyes open to LNG although I could tell you that there’s nothing imminent or specific.”

“It’s still very challenging to justify project economics, especially in a competitive market situation. You really need very big or strong balance sheets to back that in the absence of long-term power purchase agreements. It makes it very very challenging. But we keep an open mind,” he added.

In April last year, Phinma Energy unit Phinma Petroleum and Geothermal, Inc. told stockholders that it was developing an LNG facility with a 120-MW power plant in Argao, Cebu province, which company officials expected to be completed by 2022 to 2023. They later said the project was on hold ahead of better electricity prices. — Victor V. Saulon

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