Masinloc‘s new owner mulls equity sale to strategic partner

AES Corp., the new owner of the Zambales-based Masinloc coal-fired power plant, is mulling the possibility of divesting some of its shares in the facility to a strategic partner.

Industry sources said AES Philippines, the corporate vehicle for the Masinloc acquisition, is planning to “introduce a minority partner in the near future.”

AES Philippines is closing first its sale transaction for Masinloc with the Power Sector Assets and Liabilities Management Corp. (PSALM), the state agency handling the privatization of power assets.

In a public bidding last July, AES submitted the highest offer for the 600-megawatt facility at $930 million.

Recently, the International Finance Corp., the private sector investment arm of the World Bank, had approved a financing package of up to $275 million to AES to partly fund the acquisition.

A portion of the financing package would reportedly come in the form of equity investment by IFC in Masinloc.

“AES intends to sell portion of the equity and introduce a minority partner in Masinloc Power Partners Corp. very close to the financial closure,” IFC said.

Masinloc Power Partners Corp. (MPPC) was the vehicle used by AES to acquire the Masinloc plant. MPPC was awarded the asset in July and is currently completing its acquisition plans.

The total project cost for the Masinloc facility is estimated at $1.1 billion, inclusive of the acquisition price, funding for the debt service reserve account, transaction costs, refurbishment works and initial working capital needs.

AES earlier said they are willing to invest up to $1 billion to expand the capacity of the Zambales plant by another 600 megawatts.

“We are intending to expand and double Masinloc’s capacity as soon as we complete the acquisition. We may spend up to another $1 billion,” Matthew L. Bartley, AES Philippines president and CEO, said.

He said AES, one of the biggest power industry players in the US, is also looking at greenfield or entirely new power projects to meet the growing electricity demand in the country.

Bartley said they are optimistic they could close the Masinloc transaction in the next few months.

AES is expected to come up with the 40 percent upfront payment as a pre-condition to the closing of the sale transaction.

Located about 250 kilometers northwest of Metro Manila, the Masinloc power facility covers about 137 hectares, including 11 hectares on land reclaimed from the sea.

The power plant was designed and commissioned in 1998 as a two-unit, 600-mw plant. The plant utilizes refined coal from Australia, China, Indonesia and occasionally, local coal.

Listed at the New York Stock Exchange, AES is a leading global power developer and operator in the world.