First Gen eyes P15 billion from stock rights offer

MANILA, Philippines - First Gen Corp., the power generation unit of the Lopez Group, will undertake a stock rights offer to raise P15 billion in line with an increase in its authorized capital stock to P7.25 billion from P3.27 billion.

In a disclosure to the Philippine Stock Exchange, First Gen said the planned rights offering will strengthen the company’s balance sheet.

“The proceeds of the rights offering will be used to provide additional liquidity to manage the company’s debt position and for other general corporate purposes,” it said.

The company said the capital raising scheme is an equitable fundraising option because the existing eligible shareholders will have the opportunity to subscribe their pro-rata shareholding in the company and thus not be subject to dilution.

“Allowing existing eligible shareholders to participate in a non-dilutive fundraising exercise by way of a rights offer was among the principal considerations of the equity financing transaction,” it said.

First Gen said the proposed increase in capital, which is subject to approval by the shareholders of the company and the Securities and Exchange Commission, will consist of 3.23 billion common shares (with a par value of P1) and 1.5 billion voting preferred shares (with a par value of 50 centavos).

First Gen said the increase in authorized capital stock is intended to provide for the share capital requirements of the rights offer which may vary depending on the fluctuations in the company’s share price between now and the date the rights offer price is determined.

The proposed increase in capital stock , the company said, also takes into consideration the company’s need to maintain adequate authorized capital stock to allow for the issuance of additional shares related to adjustments in the conversion price of the company’s outstanding convertible bonds as a result of the rights offer and other corporate actions.

Lopez-owned energy holding firm First Philippine Holdings Corp. (FPHC) controls 68.6 percent of First Gen, the country’s biggest independent power producer with and installed capacity of 2,357.4 megawatts.

Its operating companies include First Gas Power Corp., which operates the 1,000-megawatt Santa Rita power plant; FGP Corp., the operator of the 500-MW San Lorenzo power plant; Bauang Private Power Corp., which constructed and operates the 225-MW Bauang power plant; First Gen Hydro Power Corp., which operates the 112-megawatt Pantabangan-Masiway hydroelectric power plants; FG Bukidnon Power Corp., which operates the 1.6-MW Agusan power plant; and Energy Development Corp., the country’s largest producer of geothermal energy.