EDC completes payment of ¥12-billion Miyazawa loan

MANILA, Philippines - Lopez-controlled Energy Development Corp. (EDC) has completed the payment of about ¨¥12 billion worth of debt under the Japanese government’s Miyazawa Initiative.

In a disclosure to the Philippine Stock Exchange, EDC said the bullet payment for Miyazawa I was completed last June 1 as part the company’s hedging scheme.

“At the time of its maturity, EDC’s currency exposure was covered by a number of hedging arrangements consisting of range bonus forward and plain vanilla forward contracts,” it said.

The company said it realized savings of P209.1 million from these hedging exercises.

EDC president and CEO Paul Aquino said they would continue to undertake these loan refinancing schemes to be able to manage their risk.

“The company intends to hedge its currency exposure on its remaining Japanese yen obligations, i.e. particularly for Miyazawa II,” he said.

The Miyazawa II loan of the company is worth ¥22 billion.

The EDC official said the hedging of the Miyazawa loan II will be carried out in several tranches to spread the risk.

“We will not do it in full shot. We have to do it in tranches to average it out,” he said.

Japan has set up the $30-billion Miyazawa Fund — named after the then Japanese finance minister — in 1999 as a financial and package to help Asian countries reeling from the Asian financial crisis.

As this developed, EDC also disclosed that it has sold its Fort Bonifacio property to Philippine National Oil Co. (PNOC) for P1.01 billion last June 1.

EDC said it sold 19,785 square meters to PNOC, where the company’s headquarters are located.

The company said the sale was in accordance with the EDC board’s resolution dated Nov. 13, 2007. 

On November 2007, Red Vulcan Holdings Corp., a subsidiary of First Gen, won the bid for PNOC’s stake in PNOC-EDC with an offer of P58.5 billion.

EDC’s sale to PNOC for the remaining portion of the land is to be consummated with the signing of the deed of exchange among EDC, the Department of Energy (DOE) and the Bases Conversion Development Authority (BCDA) covering a land swap arrangement.

The company said its management expects to conclude the transaction within this year.

At the same time, EDC disclosed that one of its independent directors, Eric Recto, has resigned.

Recto’s resignation, EDC said, was due to “various commitments”.

Recto is the concurrent president of Petron Corp., another subsidiary of PNOC which was also fully-privatized.

PNOC-EDC is currently the largest geothermal producer in the country with an installed capacity of over 1,100 megawatts. This represents 60 percent of the country’s total geothermal capacity.