PNOC-EDC sets IPO price at P3.20

PNOC Energy Development Corp. (PNOC-EDC), the geothermal arm of state-run Philippine National Oil Co.(PNOC), has set the offer price for shares to be sold through an initial public offering (IPO) at P3.20 each share to raise at least P14.4 billion.

The offer price is at the high end of the range it had set.

PNOC-EDC will offer to the public 4.5 billion and 5.2 billion PNOC-EDC shares from Dec. 4 to 8.

Ten percent of the IPO shares had been set aside for small investors to give ordinary workers and employees a chance to invest and be part owners of the state-owned utility firm.

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.

Listing of the shares has been set on Dec. 13.

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 is projecting a 10 percent growth in its net profit this year to about P5.28 billion. Without non-recurring gain, the company’s PNOC-EDC’s net income was P4.8 billion.

In the nine months ending September this year, the company’s net income already reached P4.617 billion, down from P5.639 billion a year earlier due to reduced electricity sales and lower foreign exchange gains.