Gov’t firming up Magat plant transfer to Aboitiz

The Power Sector Assets and Liabilities Management Corporation (Psalm) has started negotiations with the National Power Corp. (Napocor)'s creditors for the transfer of 360-megawatt (MW) Magat hydroelectric power plant to its new owners SN Power and Aboitiz Power (SNAP) Corp. "Specifically, Psalm is getting the consents and proceedings from the major creditors of the Napocor allowing the transfer of the purchased assets as specified in the APA (asset purchase agreement)," PSALM president and Chief Executive Officer Nieves L. Osorio said. Aside from the creditors' consent, PSALM also will deliver to Magat's new owners the closing deliverables including the Certificate of Closing and the Certificate of the Seller's Representations and Warranties. On Wednesday, PSALM issued the Notice of Award for the Magat plant, officially declaring the consortium between the Norwegian power firm and the local Aboitiz group the winning bidder. The award along with the Certificate of Effectivity for the APA for the Magat facility was received by Aboitiz Power president Erramon Aboitiz and consortium director Luis Miguel Aboitiz. Recently approved by the PSALM Board, the APA including the transaction documents for the Magat sale takes effect three days after PSALM delivers the certificate of effectivity or, when the consortium receives the certificate. The certificate was issued after the PSALM Board acquired the necessary government approval. The APA for the Magat facility requires SNAP to deliver at least 40 percent of the purchase price of $530 million as upfront payment payable on or before the closing date. The balance of 60 percent may be paid in 14 equal semi-annual payments with an interest of 12 percent per annum compounded semi-annually. The consortium is also required to post a performance bond equivalent to two percent of the purchase price. The performance bond will be reduced every year equivalent to two percent of the aggregate amount of the deferred payments. SNAP likewise needs to post a deferred payment security deposit equivalent to at least the next deferred payment in the form of cash, currently dated manager's check or an irrevocable standby letter of credit acceptable to PSALM. During the deferred payment period, PSALM will turn over to the consortium the Magat facility on the condition that it will operate, maintain and rehabilitate the complex in the ordinary and usual course of business. Treasury shares sale to raise funds In a separate interview, officials of Aboitiz Equity Ventures, Aboitiz Power's parent firm said the company would sell its treasury shares in order raise funds for the full acquisition of the Magat plant. Erramon Aboitiz, who also sits as Aboitiz Equity's executive vice president, said the firm hopes to raise roughly P5 billion from the sale of its 750 million treasury shares within the first half of the year Aboitiz said part of the proceeds would be used for two other greenfield hydro power facilities in Mindanao. "The two greenfield plants, alone, which have a combined capacity of 72-megawatts, would cost us around P8 to P9 billion," Aboitiz said. With a bid of $530 million, the consortium beat the $420.9-million bid by First Generation Northern Energy Corp. The Magat power plant was the second facility successfully bid out by PSALM last year. -GMANews.TV