Benpres acquires Red Vulcan's loans

Benpres Holdings Corp. has acquired a portion of Red Vulcan Holdings Corp.’s loans using proceeds from the sale of its stake in First Philippine Infrastructure Inc., the government’s private sector partner in the Manila North Tollways Corp.

Red Vulcan is a wholly-owned subsidiary of the Lopez family’s First Gen Corp. which owns a 60 percent voting interest in geothermal power firm Energy Development Corp. Benpres owns 43.08 percent of First Philippine Holdings Corp.

The loan, which was acquired in 2007 to purchase EDC shares from the Power Sector Assets and Liabilities Management Corp., will mature in May 2009. The consortium acquired EDC for P58.5 billion.

First Gen is the largest power generation company in the Philippines with an installed capacity of 2,582 megawatts. It accounts for approximately 17 percent of total installed capacity in the country today. In addition to the Santa Rita and San Lorenzo power facilities, First Gen owns, through its subsidiary Red Vulcan Holdings Corp., a controlling stake in EDC.

EDC is the largest supplier of geothermal energy in the Philippines and is principally responsible for the Philippines being the second largest geothermal energy producer in the world.

Japanese-owned Marubeni Corp. earlier forged an agreement with First Gen to “seriously consider” investing up to 40 percent in Red Vulcan Holdings. The deal is expected to be closed before the end of the year.

First Gen said the investment from Marubeni will allow Red Vulcan to use part of the proceeds to prepay the balance of its loan amounting to P13.9 billion.

Marubeni is a world-class global power player with a successful track record in the international independent power-producing business, including geothermal generation.

Richard Tantoco, First Gen executive vice president and chief operating officer, said Marubeni’s investment in Red Vulcan is a clear sign of confidence in the intrinsic value of EDC.