Aboitiz Power launches P3-B peso bond sale

MANILA, Philippines - Listed Aboitiz Power Corp. has launched P3 billion worth of five- and seven-year peso-denominated bonds to fund operations and the acquisition of power plants. In a disclosure to the stock exchange on Wednesday, Aboitiz Power said the corporate notes would be offered to about 19 big investors. The bond offer, which started the other day, is expected to close at the end of the year. Aboitiz Power said it might opt to increase the offer size depending on market response. The company noted good investor response to its offer during a briefing on Wednesday, although it was too early to determine how it would go. BDO Capital and Investment Corp., BPI Capital Corp., First Metro Investment Corp. and the Manila branch of ING Bank N.V. will act as the joint lead managers of the bond issue. Aboitiz Power earlier said it was eyeing the 192.5-megawatt Palinpinon geothermal plant, which the government will sell next year. It is also interested in the 168.5-megawatt Panay-Bohol diesel plants, set to be auctioned off on Nov. 12 as part of the government’s power asset privatization program. The company earlier said they might also bid for the independent power producer administration of the 1000-megawatt Sual power plant in Pangasinan and the 700-megawatt Pagbilao plant in Quezon. Both are operated by Team Energy under build-operate-transfer contracts that will expire in 2024 and 2025, respectively. The sale was officially launched by the Power Sector Assets and Liabilities Management Corp. on Wednesday. The bid date for the plant is on Feb. 20, 2009. Aboitiz Power’s net profits went down by 8% to P1.1 billion in the third quarter from a year earlier, even as nine-month profits went up by more than a third to P3.17 billion. The company cited a non-recurring net loss of P281 million for the nine-month period due to foreign exchange net losses of P535 million resulting from the revaluation of dollar-denominated loans and placements of some of its subsidiaries. It also cited the reversal of a P254-million provision made by an associate company due to an arbitration settlement. Excluding the losses, Aboitiz Power had a nonrecurring net income of P3.45 billion, 73% higher than a year earlier. Its P3.17-billion net earnings for January to September translated into an earnings per share of 43 centavos. In a related development, high oil prices and stiff competition from budget carriers wiped out the profits of listed unit Aboitiz Transport Systems Corp., which reported losses in the third quarter. In a statement, the company said a 17% jump in costs and expenses had led to net losses of P66.2 million, compared with P130 million in profits a year earlier. "Fuel costs continue to be a challenge for the company. To help mitigate the negative impact of this to its margins, the company has been transforming itself into a value-added service organization with its efforts focused on integrating its services to build complete supply chain management solutions," the company said in a statement. — A.K.K. Austria and P.L.G. Montecillo, BusinessWorld