Red Vulcan taps P28.9-B bridge loan for EDC purchase

The consortium that won in the recent bidding for a 60-percent stake in Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) has tapped a P28.9-billion bridge financing facility to fund the purchase of the controlling interest in the geothermal firm.

Red Vulcan Holdings Corp., made up of the Lopez-owned First Gen Corp., Prime Terracota Holdings Corp. and Spalmare Holdings B.V. of the Netherlands, has secured the bridge financing facility from the Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP) and ING Bank.

The amount will partly pay the 60-percent majority stake in PNOC-EDC worth P58.5 billion.

Red Vulcan has settled the amount due the government last Thursday, which has already been earmarked to narrow the revenue gap for the year.

DBP and ING were the financial advisors of the government in the privatization of PNOC-EDC, the largest asset disposed by the state in recent years.

The two institutions and LBP offered the winning bidder the bridge financing to expedite the payment for the controlling shares in the state-owned firm.

Each financial institution contributed roughly P9.6 billion to the fund pool. The staple financing is payable in 18 months with the lenders’ exposure exempted from the 25 percent prudential single borrower’s limit imposed by banking regulators.

The balance of roughly P28.6 billion will come from the three members of the consortium. First Gen Corp. said  it already had $300 million available as its share of the  balance.

Red Vulcan bested other buyers with a winning bid of P58.5 billion, more than P11.5 billion the floor price set by the authorities, giving the consortium the exclusive right to explore and develop key geothermal reserve areas in the country through long-term contract with the state.