By Victor V. Saulon, Sub-editor
ENERGY Development Corp. (EDC) said its board of directors had approved on Wednesday the voluntary delisting of the Lopez-led company’s common shares from the main board of the Philippine Stock Exchange (PSE).
In a disclosure to the exchange, the renewable energy company said it would conduct a tender offer for up to 2,040,006,713 common shares at P7.25 each that are held collectively by the public.
“The intention to eventually delist EDC was shared with the market last year and the tender offer that our board has approved today presents a meaningful opportunity for our minority shareholders to realize their investment prior to the delisting of the company, at a significant premium to the current share price,” EDC President and Chief Operating Officer Richard B. Tantoco stated.
EDC, along with its parent firm First Gen Corp., sought a suspension of trading of its shares because of the delisting decision. Its shares were last traded at P4.95 each.
The company said the tender offer price is “subject to certain terms and conditions as now or hereafter set forth” by the company. Excluded from the tender offer are shares held by Red Vulcan Holdings Corp., First Gen Corp., Northern Terracotta Power Corp., and Philippine Renewable Energy Holdings Corp. (PREHC).
The tender offer price represents a 46% premium over the closing share price on Aug. 7, and a 40% premium over the three-month volume weighted average price of P5.18.
EDC said independent financial adviser KPMG issued an opinion based on an independent valuation that the tender offer price is fair and reasonable from a financial point of view.
Subject to the filing by EDC of the tender offer report with the Securities and Exchange Commission (SEC), the offering period is expected to run from Sept. 25 to Oct. 22, 2018.
It is subject to a minimum of 1,162,000,000 common shares being tendered and eligible for acceptance by EDC, which will reduce the percentage of shares held by the public from 10.9% to less than 5%. The reduction will allow a voluntary delisting of the company, subject to PSE approval on the threshold condition.
With the SEC’s approval, EDC may extend the tender offer period and may, at its discretion, waive the threshold condition.
The tender offer follows the completion in September 2017 of PREHC voluntary tender offer to acquire 8.9 billion common shares of EDC.
EDC said at that time, PREHC and First Gen had communicated to the market their intentions to eventually delist the unit, to pursue a corporate strategy that would require greater flexibility over factors like its dividend policy and leverage, and to support long-term growth.
EDC is the country’s largest renewable energy producer, delivering 1,472 megawatts (MW) from hydro, solar, and wind power apart from geothermal.
The company’s 150-MW Burgos wind farm is the biggest in the country. Its nearly 1,200-MW geothermal capacity accounts for 61% of the country’s total installed geothermal capacity.
Parent firm First Gen has a portfolio of 3,490 MW, which accounts for 21% of the country’s gross generation capacity.
PREHC is a consortium of investors comprised of funds managed by Macquarie Infrastructure and Real Assets, and Arran Investment Pte Ltd., an affiliate of GIC Pte Ltd.
By Victor V. Saulon, Sub-editor