First Holdings seeks to raise P17B in ’08

First Philippine Holdings Corp. (FPHC), the holding firm for all power generation and tollways businesses of the Lopez family, is planning to raise up to P17 billion through a combination of debt and equity issuances.

In a press briefing following the firm’s special shareholders meeting, FPHC president Elpidio Ibañez said the company is finalizing a dual tranche floating rate note facility amounting to $220 million with an option to increase it to $270 million (roughly P12 billion).

BDO Capital & Investment Corp. is the lead arranger and sole bookrunner for the facility.

Proceeds from the floating rates issue will be used to acquire an additional 15.7-percent stake in power distributor Manila Electric Co., comprising Union Fenosa International S.A.’s indirect 9.1-percent interest and Meralco Pension Fund’s 6.6-percent direct ownership.

The acquisition will increase FPHC’s direct and indirect ownership in Meralco to 33.4 percent.

FPHC earlier said it bought out Spain’s Union Fenosa’s stake in First Philippine Union Fenosa, which owns 22.86 percent of Meralco, for $250 million as well as Meralco Pension Fund’s stake for P8.3 billion.

Ibañez also said the company is planning to raise P5 billion from the sale of preferred shares which will take place in the first semester of 2008.

Proceeds from the share sale will be used to increase the company’s stakes in its existing core businesses – Meralco, First Gen Corp. and Manila North Tollways Corp. – as well as to fund new strategic investments in infrastructure, manufacturing and property.

At present, FPHC holds a 66 percent stake in First Gen and 34 percent of MNTC.

Ibañez said other proceeds from the preferred share issue may be used to refinance debt.

With the acquisition of additional stake in Meralco and new debt, FPHC’s total liabilities would increase to P24.59 billion from P16.49 billion.

FPHC has P4.819 billion worth of debts maturing in 2009.

FPHC has raised its capitalization from P12.1 billion to P32.1 billion

to create 200 million preferred shares with a par value of P100 per share.

Ibañez said the company is open to forging partnerships with local and foreign firms to bid for the government’s more than 20 percent stake in Meralco. “We’re looking at a long list of interested bidders.”

In July, FPHC obtained a $100 million loan from Banco de Oro-EPCI to fund the purchase of more shares in Meralco.

The government plans to divest its shares in Meralco to raise additional revenue to plug its budget deficit.