Aboitiz Power raising capital to P17B ahead of IPO, share swap

Aboitiz Power Corp., a wholly-owned subsidiary of Aboitiz Equity Ventures Inc. (AEV), is raising its capitalization to P17 billion from only P5 billion in preparation for its planned initial public offering (IPO) and a share swap with its parent company.

Aboitiz Power will issue to AEV shares out of the proposed increase in its capital stock in exchange for shares held by the parent firm in Davao Light & Power Co. Inc., Visayan Electric Co. Inc., Hijos de F. Escaño Inc., Cotabato Light & Power Co., Subic Enerzone Corp., San Fernando Electric Light and Power Co., Pampanga Energy Ventures Inc., and Aboitiz Energy Solutions Inc.

These shares will be transferred to Aboitiz Power at their historical acquisition costs in exchange for shares of Aboitiz Power valued at par, AEV said in a disclosure to the Philippine Stock Exchange (PSE).

All power generation and distribution assets of the Aboitiz Group will now be housed under Aboitiz Power.

AEV will hold a special meeting to seek shareholders’ approval of the planned IPO as well as the transfer of AEV’s investments in power companies to Aboitiz Power. The meeting will be held on Feb. 27 in Cebu.

The planned IPO is also subject to the approval of the Securities and Exchange Commission, PSE, Bureau of Internal Revenue and other required regulatory authorities.

AEV said the IPO is consistent with the provisions of the Electric Power Industry Reform Act (EPIRA) which calls for broader public ownership of electricity distribution and generation assets.

The offering is also seen to enhance Aboitiz Power’s position as a participant in the privatization of National Power Corp. (Napocor) assets as well as in the development and acquisition of additional.

AEV said it was assured by the PSE that the chain listing rule would not be a hindrance to the proposed listing of Aboitiz Power.

A company source said the group is hoping the IPO could take place within the first quarter of the year to ride on the resurgent stock market fueled by strong investor interest and rosy economic prospects.

Around 20 percent of Aboitiz Power may be sold to the public to raise capital for new greenfield projects and to bid for the generation assets to be sold by the government.

The AEV power firms, including Aboitiz Power, had a combined net profit of P1.98 billion in the first three quarters of 2006. Of the total, P634 million was contributed by Davao Light, the third largest power distribution utility in the country.

Luzon Hydro, a joint venture between the Aboitiz Group and Pacific Hydro Ltd. of Australia, reported a net income of P568.65 million followed by Visayan Electric with a net income of P339.49 million.

Visayan Electric is the second largest power distribution utility serving Metropolitan Cebu, the second largest city in the Philippines.

Hedcor, the pioneer in the development and operation of environment friendly mini-hydropower plants (below 50 megawatts of electricity) in the Philippines, contributed P198.14 million followed by Western Mindano Power Corp. with P75.77 million.

Western Mindanao is a joint venture between Aboitiz Power, Alsons Group and SingPower. It owns a 100-megawatt diesel power plant in Zamboanga.

San Fernando Electric posted a net profit of P36.62 million, Cotabato Light (P35.46 million), Southern Philippines (P31.7 million), Subic Enerzone (P28.1 million), Aboitiz Energy Solutions (P22.67 million), and Aboitiz Power (P6.12 million).