MANILA, Philippines - Lopez-owned First Gen Corp. has used up over half, or P7.87 billion, of the P14.9-billion proceeds from its rights offering to pay off debts.
In a disclosure to the Philippine Stock Exchange (PSE), First Gen corporate secretary Rachel Hernandez said the company allotted P5.29 billion of the proceeds from the rights offering in August 2009 to pay off its investment in Prime Terracota Holdings Corp.
In May 2009, Prime Terracota issued Class B preferred shares to Lopez Inc. Retirement Fund and Quialex Realty Corp.
With the preferred share issuance, First Gen’s voting interest in Prime Terracota was reduced to 45 percent, resulting in the deconsolidation of Prime Terracota and its subsidiaries, which include Red Vulcan Holdings Corp.
Red Vulcan is the entity that holds a 60 percent voting and 40-percent economic stake in Energy Development Corp., the geothermal development arm of the Lopez Group.
The deconsolidation allowed First Gen’s 40 percent economic interest in EDC to be accurately reflected in its financial statements.
Red Vulcan bought EDC from the government after offering the highest bid and paying in full P58.5 billion.
This month, First Gen said it allotted P2.45 billion of the proceeds to repay Prime Terracota’s debt.
The remaining disbursement of the proceeds from the rights offer was used to pay off other fees and interest expense payment for Prime Terracota.
First Gen’s stock rights offering was held from Jan. 8 to Jan. 14 while the listing date was concluded last Jan. 22.
“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,” the company said in an earlier disclosure.
Earlier, the board of First Gen approved the increase in its authorized capital stock from P3.27 billion divided into 2.77 billion common shares with a par value of P1 per share and one billion redeemable preferred shares with a par value of 50 centavos per share, to P7.25 billion divided into six billion common shares with a par value of P1 per share and 2.5 billion redeemable preferred shares with a par value of 50 centavos per share, which preferred shares consist of one billion Series “A” to “D” preferred shares and 1.5 billion Series “E” preferred shares.