First Gen taps JP Morgan for sale of PNOC-EDC stake

US investment bank JP Morgan has been hired by the Lopez group’s First Gen Corp. to oversee the planned sale of some of its shares in PNOC-Energy Development Corp.

First Gen wholly owns Red Vulcan Holdings Corp., the new majority owner of the geothermal power producer through its purchase of P58.5 billion worth of shares equivalent to a 60-percent stake in the geothermal firm.

In a disclosure to the Philippine Stock Exchange (PSE), First Gen vice president and compliance officer Victor Santos Jr. said JP Morgan will act as the financial advisor for the proposed sale of a portion of First Gen’s equity stake in Red Vulcan Holdings Corp.

“The proposed transaction will be by way of negotiated purchase, competitive bidding or any other means as may be agreed upon,” he said.

First Gen, however, did not disclose concrete details of the planned sale of the Red Vulcan shares.

In January this year, First Gen acquired the entire 40-percent stake of its Netherlands-based partner Spalmare Holding B.V., paving the way for its full ownership  of Red Vulcan.

Through its subsidiary Prime Terracota Holdings Corp., First Gen said it completed the full dilution of Spalmare. Spalmare is a joint venture between Icelandic sustainable energy firms Reykjavik Energy Invest hf (REI) and Geysir Green Energy ehf (GGE).

“The dilution has the effect of First Gen, owning, directly and indirectly, 100 percent of Red Vulcan,” Santos said.

“However, Spalmare has the option, exercisable until Feb. 27, 2008 to rejoin the consortium and fund its equity portion, failing which the option will lapse,” he pointed out.

First Gen president and CEO Federico Lopez, said PNOC-EDC “will become a very strong asset for First Gen.”

“We intend to take it to the next level. Basically, it’s now second the largest geothermal company in the world and we intend to make it even bigger under First Gen,” Lopez said.

First Gen’s assets include the 1,000 megawatt (mw) Santa Rita and 500-mw) San Lorenzo natural gas-fired power plants, the 225-mw Bauang medium-speed bunker-fired diesel power plant, the 112-mw Pantabangan-Masiway hydroelectric Complex and the 1.6-mw Agusan mini-hydropower plant.

 PNOC-EDC is currently the largest geothermal producer in the country with an installed capacity of 1,149.4 mw representing 60 percent of the country’s total geothermal capacity.