PNOC-EDC eyes up to P8.35B from offering

PNOC Energy Development Corp. (PNOC-EDC), the geothermal arm of state-run Philippine National Oil Co., expects to raise between P5.3 billion and P8.35 billion from the maiden offering of its shares to the public.

At the same time, the company said it is projecting its net profit to grow by 10 percent to P5.28 billion this year.

Without non-recurring gain, PNOC-EDC’s net income stood at P4.8 billion. Its net operating income amounted to P8.6 billion.

In the first nine months of the year, the company’s net income amounted to P4.617 billion, down from P5.639 billion a year earlier due to reduced electricity sales and lower foreign exchange gains.

PNOC-EDC is selling between 2.12 billion shares and 2.609 billion shares at a price ranging from P2.50 to P3.20 each. The final offer price will be fixed on Dec. 2, 2006.

To drum up support for its upcoming initial public offering (IPO), PNOC-EDC has already started its domestic roadshow in Davao and Bacolod.

The international roadshow, on the other hand, is expected to start on Nov. 20 until Dec. 1.

Listing of the shares, on the other hand, has been tentatively scheduled for Dec. 13.

The shares to be issued by the company will come from the increase in its capital stock to P15 billion.

CLSA Exchange Capital is the sole book and international underwriter for the issue while Development Bank of the Philippines, BDO Capital & Investment Corp., ING Bank N.V, and Land Bank of the Philippines will serve as lead underwriters for the domestic issue.

In case of oversubscription, PNOC-EDC has set aside 635 million to 783 million shares, representing up to 15 percent of offered shares, for sale to the public.

PNOC-EDC accounts for about 60 percent of total installed geothermal energy capacity in the Philippines, the world’s second-biggest producer of geothermal energy. It supplies fuel to 12 power plants.

Its four geothermal fields in Leyte, Negros Oriental, Bicol and Cotabato have a total capacity of 1,149.4 megawatts as of end-December 2005.

The IPO is in line with the government’s policy to restructure and privatize the power sector to reduce its role in industries where there are private-sector interests, and to further cut its hefty budget deficit.

Proceeds from the offering will be used for the modernization and upgrading of the company’s facilities and for other capital requirements.

PNOC-EDC has earmarked P2.98 billion for its capital expenditures next year, which include the Northern Luzon Wind Power project in Ilocos Norte.

Of the proposed budget, P1.35 billion will go to the first phase development of the North Luzon Wind Power project, which involves the establishment of wind farm facilities with support equipment, related transmission lines and substation facilities. The first phase is expected to be completed by the first quarter of 2009.

PNOC-EDC is also studying potential sites in Bayog, Nagsurot also in Ilocos Norte, which will potentially generate 98 megawatts. Studies for both sites were funded by the German government through KfW.

In the Visayas, the company has recently completed a feasibility study in Manoc-Manoc in Malay, Aklan funded through a grant from KfW.

In Palawan and Camiguin Island, PNOC-EDC is conducting new studies through a grant from the Spanish government.

In Mindanao, the company has installed meteorological masts in Nubenta, Carrascal, Surigao del Sur.