By Arra B. Francia, Reporter

PHILIPPINE H2O Ventures Corp. (H2O) is spinning off its water assets as it prepares for a takeover by Davao-based businessman Dennis A. Uy’s property company.

In a disclosure to the stock exchange on Thursday, H2O said its board of directors approved the sale of its water business to sister firm Tabuk Water Corp. (Tabuk) for P442 million. Both parties have also signed a share purchase agreement for the transaction.

H2O’s water business is solely under Calapan Waterworks Corp. (CWWC), where it holds a total of 137.05 million common shares, or 99.75% of the issued and outstanding shares.

CWWC owns and operates the local waterworks system of Calapan City, Oriental Mindoro. The company serves 22 urban barangays and 13 adjoining rural barangays, connecting a total of 13,384 households as of 2016.

The spin-off of the water business is in line Memorandum of Agreement between H2O’s parent, Jolliville Holdings Corp. (JOH) and other related parties and Mr. Uy’s Udenna Development Corp. (UDEVCO) last December 2017. Here, JOH agreed to sell all its shareholdings, or 62.006%, in H2O to UDEVCO.

At least two-thirds of the shareholders of H2O would have to approve the transaction before it can be completed, as well as the confirmation by UDEVCO and JOH.

UDEVCO will also be launching a mandatory tender offer for the H2O shares, as per the Securities Regulation Code.

Shares in H2O jumped 13.03% or 77 centavos to P6.68 apiece at the stock market’s close on Thursday, while parent JOH enjoyed a 7.54% increase or 37 centavos to P5.28 each. The two firms were among the top gainers for the day, defying the Philippine Stock Exchange index’s 1.14% drop to 8,515.57 as rising bond yields continued to put a pressure on global markets.

Mr. Uy’s property arm had earlier expressed interest taking its business public, saying it is considering an initial public offering or backdoor listing.

UDEVCO currently operates Lapu-Lapu Land Corp., a Cebu-based firm undertaking the development of a $341-million Lapu-Lapu Leisure Mactan project. Spanning 12.5 hectares, the project will house a casino, retail complex, and hotels. The company looks to start the casino’s operations as early as 2019, ahead of the development’s target completion in 2022.

Mr. Uy has been steadily expanding his business since the start of President Rodrigo R. Duterte’s administration. His logistics arm, Chelsea Logistics Holdings Corp., has been snapping up logistics firms to grow its reach after conducting a P5.84-billion IPO last June 2017.

THE COUNTRY’S anti-trust body has given the go-signal for two joint venture deals last week, one of which involves property giant Ayala Land, Inc. (ALI)’s partnership with Royal Asia Land, Inc. (RALI) to develop a mixed-use estate in Cavite.

In a statement issued Thursday, the Philippine Competition Commission (PCC) said the partnership between ALI and RALI does not result in substantial lessening of competition in their respective relevant markets.

The two firms are currently forming a 50-50 venture company that will acquire, own, and develop a 936-hectare property that covers Silang and Carmona in Cavite. The project is slated to house both commercial and residential components.

Under the deal, ALI will act as the property’s project and development, and sales and marketing manager. It will receive 12% of the joint venture company’s gross revenues for the development management fee, and 5% for the sales and marketing fee.

On the other hand, RALI will participate in the planning and development of the property, which entitles it to a 2% share in the joint venture’s gross revenues.

At the same time, the PCC also approved the proposed partnership between Markham Resources Corp. (MRC) and Alternergy Mini Hyrdo Holdings Corp. (AMHHC) to operate three mini hydro projects, namely Kiangan Mini Hydro Corp., Ibulao Mini Hydro Corp., and Lamut-Asipulo Mini Hyrdo Corp.

The three firms will collectively be called Markham-Alterenergy joint venture companies, which will operate, develop, and maintain run-of-river mini-hydro projects located across Asin, Ibulao, Hungduan, Lamut, and Panubtuban in the Ifugao province.

The PCC described MRC as a local firm whose core business is in electricity generation and/or distribution and/or hydropower plants. On the other hand, AMHHC’s business is focused on the sale, assignment, transfer, mortgage, pledge, exchange, or other disposition of real and personal property.

The PCC noted there are enough players in the relevant market that provide competitive constraints for such a joint venture, allowing MRC and AMHHC to proceed with the transaction.

Companies undertaking merger and acquisition transactions, including joint ventures, whose value meet the P1-billion threshold set out under the Philippine Competition Act must secure the PCC’s approval before closing a deal.

So far, the PCC has received 151 notifications for merger and acquisition transactions with a combined value of P2.25 trillion across the manufacturing, financial, electricity, real estate, and transportation sectors. Of this, 41 are global mergers.

Earlier this week, PCC Chairman Arsenio M. Balisacan said the agency is preparing a proposal that will raise the P1-billion threshold for reporting M&A deals.

The private sector has been pushing for a higher notification threshold since the P1-billion level is considered too low, overburdening the PCC and creating delays for companies involved in M&A deals. — Arra B. Francia

By Victor V. Saulon, Sub-Editor

CEBU CITY — Local banks continue to extend loans to new coal-fired power plant projects despite the Philippines being directly hit by climate change, the chairman of Lopez-led First Philippine Holdings Corp. (FPH) said.

Federico R. Lopez, who is also FPH chief executive officer, said banks are “tripping over each other” in extending loans to coal power plants even if they recognize that burning the fossil fuel means emitting greenhouse gases.

“Coal-fired power plants, being the easiest to develop and its fuel supply the simplest to procure, every competitor and new entrant is seeking to build more coal-fired power plants in a vicious race to the bottom,” he told participants of the second Philippine Environment Summit in Lahug, Cebu City on Thursday.

“Adding to these pressures is the fact that majority of banks continue to finance coal production and coal-fired power generation,” he said.

“In fact, major banks financed the top 120 coal plant developers by more than $600 billion over the last four years. They’ve been slow to embrace COP (Conference of Parties) 21 despite verbal pronouncements and still have quite a way to go,” he said, referring to the conference in Paris in 2015 that agreed to limit greenhouse gas emissions and slow down the rise in the earth’s temperature.

He said if banks transitioned away from coal there would be a shift toward lower carbon alternatives, renewable energy (RE) sources and even the adoption of energy efficiency measures.

Mr. Lopez also called out the government for its short-term perspective and ambivalence about climate change issues.

“Despite our countrymen’s vulnerability to the effects of global warming, only token importance is given to such concerns in national public policy. Priority is power adequacy and cheap electricity prices,” he said.

Mr. Lopez said the recent initiative to impose a coal tax is a step in the right direction but would only amount to as little as P0.01 to P0.03 per kilowatt-hour (kWh) tariffs to coal-fired power plants.

He said in other countries such as India, the coal tax is equivalent to P0.06 per kWh. South Korea’s tax on the fuel even reached P0.25 per kWh.

Mr. Lopez, who also chairs FPH units First Gen Corp. and Energy Development Corp. (EDC), said his group faces “quite a number of challenges” in the Philippines. First Gen produces power using natural gas while EDC’s output comes from geothermal plants.

He noted price competition is intense, and retail competition and open access is underway. Low price is still the main driver of electricity for consumers, he added.

“This has driven down profit margins of all power producers. But we’re driving down costs in our geothermal business, both the old fashioned way and through the use of new technology,” he said.

Despite the obstacles, Mr. Lopez said the companies he chairs are committed to a “green road.”

“There are more and more companies that are conscious about greening their footprints and supply chains. This has a lot to do with the millennial consumer coming of age. In the Philippines we’ve been seeing some electricity customers specifically coming to us because they want to green their supply chains with renewable power,” he said.

He said another reason why the Lopez group is committed to its green energy platform is the country’s competitive market.

“The Philippines is primarily a services-driven economy. Retail competition and open access that’s underway and progressing will disaggregate that demand. Our portfolio that blends flexible natural gas-fired plants and geothermal, which is the only competitive 24/7 RE technology today, is a better combination for serving this type of demand called mid-merit,” he said.

He said natural gas and geothermal, which respectively have only a third or a tenth of the carbon emissions of even the most advanced coal plants, are capable of beating the latter’s prices.

“Another reason for optimism about clean energy is that the forces of technology moving very fast. Solar, wind, and battery storage have experienced exponential cost reductions over the last few years. Never in my 20 years in the power industry have I seen anything move so fast,” he said.

Given the rapid pace of renewable energy development, Mr. Lopez said coal-fired power plants “can’t keep up with that kind of variability and may likely end up as underutilized or stranded assets in 10 years or less.”

“In countries like Australia, Germany, and some US states like California with even modest renewable energy penetration they are already experiencing coal and even gas plants being utilized less or being idled,” he said.