EDC eyes $500-M loan to boost bid to acquire Napocor assets

Lopez-controlled geothermal power firm Energy Development Corp. (EDC) plans to borrow up to $500 million to finance its capital expenditures and loan payments next year, a ranking company official said.

In a press briefing, EDC president and CEO Paul Aquino said the additional funds would back up the $200-million loan package obtained from the International Finance Corp., the private sector investment arm of the World Bank group.

“If we will be winning on our bids for National Power Corp. (Napocor) assets, we may need to borrow more,” he said.

Aquino said they are planning to participate in the bidding for Napocor’s geothermal assets such as Palinpinon, Tongonan and Bacman.

He said the remaining financing requirement would be raised by tapping several banks through syndicated loans.

“We are looking at several banks. We have received numerous proposals. We are studying it right now,” he added.

At the same time, he said they are now reviewing their hedging scheme to take into account the stronger yen.

The EDC chief noted that this year, it had already hedged so far some ¥8 billion at ¥110 to a dollar. This was 67 percent of the ¥12-billion Miyazawa 1 bullet maturity due in June 2009.

But with the yen at 92-93 to a dollar, Aquino said the company may have to review its hedging program and instead undertake a yen-dollar-peso hedging scheme which will enable them to past marginal losses.

“We had our risk assessment and we looked at our yen budget. It seems that it will not be a good thing to do if we will continue to hedge our yen loans at this point. It’s a perfect time to buy dollars at 48,” he said.

He said the remaining ¥4 billion will be hedged through a dollar-to-peso hedging scheme.

“We may have to reverse our strategy. We can hedge by buying peso-to-dollar now,” he said.

Asked when they intend to complete the hedging scheme, Aquino said “historically, the highest dollar is in the second week of December.”

As of the first quarter of 2008, the company’s total liabilities have gone down 25 percent from P44.7 billion to P33.6 billion in the same period in 2007.

EDC’s long-term debt as of the first three months of year stood at P25.3 billion, 83 percent of which are yen-denominated.