First Gen plans P5-billion preferred shares offer, doubles first quarter profit

MANILA, Philippines - First Gen Corp. the power generation unit of the Lopez Group, plans to raise up to P5 billion through the issuance of preferred shares in the fourth quarter of this year.

“What we’re looking at is P3 billion to P5 billion (worth of) preferred shares. We will be having a convertible bond to pay off at around $300 million in February 2011,” First Gen chief finance officer Francis Giles Puno said.

He said aside from paying off the convertible bonds, proceeds from the offering will also be used to partly finance other projects.

“We will issue the preferred shares in order to refinance the amount that potentially we have to pay back to investors,” Puno said.

He said they are currently in the process of securing the go-signal from regulatory bodies.

Meanwhile, First Gen reported that its net income surged 166 percent to $36 million in the first three months of 2010, from a year-ago level of $14 million.

First Gen president and CEO Federico R. Lopez said the surge was due to the increase in the net income of its subsidiary Energy Development Corp. and better electricity prices at the wholesale electricity spot market.

Lopez added the lower interest expenses incurred by Red Vulcan and the parent firm helped shore up the company’s net earnings for the first quarter.

First Gen’s consolidated revenues during the period rose 22 percent to $351 million due to higher fuel charges, as its natural gas plants used liquid fuel during the Malampaya outage.

“However, the higher fuel charges do not result in increased net income to First Gas as fuel is purely a pass-through cost in our contract with Manila Electric Co. (Meralco). In addition, income of EDC and FG Hydro contributed to equity in net earnings,” Lopez said.

First Gen is the leading clean and renewable energy company in the Philippines with an installed capacity of 2,887.4 megawatts (MW). It accounts for approximately 19 percent of total installed capacity in the country today.

First Gen was incorporated in December 1998 to become the primary holding company for the power generation and energy-related businesses of the Lopez Group. First Philippine Holdings Corp. (FPHC), parent and controlling shareholder of First Gen, became involved in the power generation industry in 1993 through its first major investment in power generation, Bauang Private Power Corp. (BPPC).

First Gen’s assets comprise the 1,000-MW Santa Rita and 500-MW San Lorenzo natural gas-fired power plants, the 225-MW Bauang medium-speed bunker-fired diesel power plant, the 112-MW Pantabangan-Masiway hydroelectric complex, and the 1.6-MW Agusan mini-hydropower plant.

In November 2007, First Gen acquired a 60 percent controlling stake in Philippine National Oil Co. - Energy Development Corp. (PNOC-EDC), now known as Energy Development Corp. (EDC).

On September 2009, First Gen affiliate EDC, through its  indirect wholly-owned subsidiary Green Core Geothermal Inc., won the bidding for the 192.5-MW Palinpinon and 112.5-MW Tongonan geothermal power plants  for $220 million. On Oct. 23, 2009, Green Core formally acquired these two plants. It paid $88 million or 40 percent of the purchase price, upon turnover of the plants. The remaining $132 million plus interest was paid on Dec. 15, 2009.

Last week, EDC subsidiary Bacman Geothermal Inc. won another bidding for the 150-MW Bacon-Manito geothermal power package with its offer of $28.25 million.