First Holdings inks $25-M loan pact with Std Bank Asia

FPH Fund Corp., a subsidiary of the Lopez-owned First Philippine Holdings Corp. (FPHC), has forged a $25-million credit agreement with Standard Bank Asia Ltd., payable over five years starting April 2007.

In a disclosure to the Philippine Stock Exchange, FPHC said the loan will be used to refinance a portion of maturing debts and fund corporate requirements.

The credit agreement is to be guaranteed by FPHC under a parent support agreement.

FPHC is the power and infrastructure investment unit of Benpres Holdings Corp. and the parent of Manila Electric Co. (Meralco), the country’s largest power distributor.

In another disclosure, FPHC said it will list an additional 2.81 million shares issued under the company’s stock options plan.

FPHC reported a net income of P3.3 billion last year, mainly coming from its power generation business. It did not provide a comparative figure but based on its 2003 annual report, FPHC posted a net profit of P3.82 billion in that year.

The lower profit was due to provisions made by Meralco, in which FPHC holds a 17.7 percent stake. FPHC’s share of the provision amounted to P1.2 billion.

Without the provision, FPHC’s profit would have grown 18 percent to P4.5 billion.

Among the company’s other subsidiaries are First Generation Holdings Corp. in which FPHC holds a 88.44-percent interest and First Philippine Infrastructure Development Corp. (38 percent).

This year, FPHC said its net profit will likely grow 10 to 15 percent, banking on higher contributions from its power distribution and tollways businesses.

Power generation is expected to contribute between 75 percent and 80 percent of FPHC’s earnings this year, slightly lower than in past years when the business contributed as much as 90 percent.

FPHC’s growth, however, is hinged on Manila North Tollways Corp.(MNTC) being allowed to collect toll rates under an approved formula.

MNTC was set up by FPIDC together with the Philippine National Construction Corp., Australia’s Leighton Asia Ltd. and Egis Projects SA. to serve the corporate vehicle for the rehabilitation of the North Luzon Expressway or NLEX, which links Manila to northern Luzon.

MNTC estimates that over 155,000 vehicles ply the expressway tollway daily. It had announced in October last year that toll fees at the NLEX would be five times higher than the old rates to generate enough cashflow to pay for the repairs and upgrade of the 84-kilometer tollway.

FPHC is not planning any major capital expenditure this year, with no big projects in the pipeline.

Although it lost in the bidding for the 600-megawatt Masinloc coal-fired power station of state utility National Power Corp., FPHC remains interested in Napocor’s asset sale.

The government has been trying to sell Napocor’s generation and transmission assets valued at P280 billion to help pay off the ailing state utility’s debts.

This year, FPHC will start servicing its debt, which now stands at $85 million.

FPHC subsidiary First Gen has a pending application with the Securities and Exchange Commission for the issuance of up to P3 billion worth of five-year fixed rate notes. The company hopes to issue the bonds in the second quarter of the year.

The bond issuance is in preparation for First Gen’s planned initial public offering (IPO) in the second half of 2005. The IPO is expected to fetch around $150 million and $200 million in proceeds, which will be used by the company to fund general corporate requirements.

First Gen intends to pursue growth opportunities in other energy-related businesses including natural gas transmission and distribution systems, fuel pipelines and fuel logistics. It is eyeing a partnership with the Philippine National Oil Co. to put up a gas pipeline and is planning to convert the 400-megawatt oil-based Sucat power plant into a natural gas-fired power facility.

The company is likewise looking at investing in existing power plants or developing greenfield projects.

Once listed, First Gen will be the fifth company owned or controlled by the Lopez family that will be traded on the exchange next to Meralco, ABS-CBN Broadcasting Corp., Benpres Holdings Corp. and FPHC.