Philippines Renewable Energy to Acquire up to 31.7% Stake in Energy Development for up to USD1.27 Billion in Tender Offer

Published: Aug 03 2017
Deal Summary

Philippines Renewable Energy Holdings Corporation (PREHC), a renewable energy company, has agreed to acquire approximately up to 31.7% stake in Energy Development Corporation (EDC), a power generation company, for a purchase consideration of approximately PHP64,525 million (USD1,279.53 million) in a public tender offer.

Under the agreement, the company has agreed to acquire a minimum of 6.6 billion common shares and up to a maximum of 8.9 billion common shares at a price of PHP7.25 (USD0.15) per share. As the 30-day volume weighted average price of EDC’s common shares is PHP5.93 (USD0.12) per share, the tender offer price equates to a premium of 22.3%. The tender offer price of PHP7.25 (USD0.15) per common share represents a 21.8% premium over the last closing share price on August 2, 2017 of PHP5.95 (USD0.12), a 21.5% premium over the six-month volume weighted average price (VWAP) and 21.5% premium over the three-month VWAP of the company’s common shares.

First Gen Corporation (First Gen), a power generation company, and its wholly-owned subsidiary, Northern Terracotta Power Corporation (NTPC), have agreed to participate in the tender offer by tendering an aggregate of approximately 2 billion common shares held by them, subject to scale-back provisions under the applicable provisions of the Philippine Securities Regulation Code. The shares of First Gen and NTPC together represent approximately 10.6% of EDC’s total outstanding common shares. Following a successful tender offer, Red Vulcan Holdings Corporation (Red Vulcan), a wholly-owned subsidiary of First Gen, will continue to own a 60% voting interest in EDC.

PREHC will be indirectly held by a consortium of investors comprising funds managed by Macquarie Infrastructure and Real Assets (MIRA), and Arran Investment Pte Ltd (Arran), which is an affiliate of GIC Pte Ltd.

The tender offer will start on August 10, 2017 and end on September 18, 2017 (tender offer period). PREHC can extend the tender offer period with prior approval from the Securities and Exchange Commission (SEC).

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