PHILIPPINE STAR: First Gen boosts stake in EDC
April 22, 2010

First Gen Corp. has strengthened its hold on its geothermal unit, Energy Development Corp., with the purchase of additional shares worth P10.89 billion.

In a disclosure to the Philippine Stock Exchange (PSE) yesterday, First Gen said it has signed call option agreements with three firms controlled by businessman Eusebio Tanco for the purchase of EDC shares.

The agreements were forged with Philplans First Inc., Rescom Developers Inc. and Philhealthcare Inc. and Systems Technology Institute Inc.

According to the company, these deals would allow it to purchase 585 million shares equivalent to 3.12 percent of EDC for a period of three years, or up to April 2013.

First Gen said based on the terms of the agreements, it would be entitled to exercise its call option over the EDC shares at the exercise price of P5.67 per share for the first year, P6.19 per share for the second year and P6.76 for the third year.

The transactions will be worth P3.32 billion in the first year, P3.62 billion in the second year, and P3.95 billion in the third year.

First Gen, which holds a 40-percent interest in EDC, has been aggressively intensifying the operations of the country’s biggest geothermal power producer.

This was made possible since it was able to raise additional cash when its parent company, First Philippine Holdings, completed the sale of an additional 6.6 percent of power utility Meralco to Beacon Electric Asset Holdings Inc., a unit of Metro Pacific Investments Corp., for P22.41 billion. The sale consisted of 74.7 million Meralco shares at P300 per share.

“With the additional resources, we can continue to take advantage of other opportunities in the power and energy sector with the end in view of maximizing value for all our stakeholders,” FPHC chairman Oscar M. Lopez said.

EDC has a pending application for five geothermal contracts with the Department of Energy (DOE).
These five geothermal areas are: Mt. Ampiro in Misamis Occidental (30 megwatts), Balingasag, Misamis Occidental (20 MW); Lakewood in Negros Occidental (40 MW); Mandalagan in Negros Occidental (20 MW)) and Mt. Zion in North Cotabato (still to be determined capacity).

EDC earlier bagged the service contracts for Mt. Labo in Camarines Norte and Mt. Mainit in Davao del Norte.

First Gen president Federico Lopez earlier said they are eyeing to spend around .5 billion for the expansion and construction of new power plants in the next three to five years.

He said they are contemplating that these expansion, rehab and construction program will add up about 1,000 MW to their currenty capacity.

He said they are also eyeing to rehabilitate the 150-MW Bacon-Manito geothermal production field that would increase capacity by another 110 MW.

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