Lopezes eye buyout of BG in First Gas

MANILA, Philippines - First Gen Corp., the power generation unit of the Lopez Group, may buy out the 40- percent stake of its partner British Gas (BG) in their natural gas joint venture.

First Gen president Giles Puno said they would exercise their right of first refusal should BG offer to sell its shares in First Gas Power Corp.

“We are also waiting. We have certain rights under our agreement with BG. They have already sold a number of their assets elsewhere — in the UK, in the US. So, there are some expectations. I don’t know how soon, but it can also take some time,” he said.

Puno said they intend to maintain control of the company even if BG decides to divest of its shares.

Unified Holdings Corp., a subsidiary of First Gen, currently owns 60 percent of First Gas which financed, constructed and operates the 500 megawatt San Lorenzo combined-cycle natural gas-fired power plant. BG, on the other hand, owns the remaining 40 percent of First Gas.

But Puno said the decision to buy out BG would still hinge on several factors.

“In our case, we’re just waiting but among other things, we are seriously considering our right of first refusal. Of course it depends on who will be our partner, or that depends on the price because it has to be a firm offer, otherwise what’s there to match,” he added.

“Should there be a firm offer from BG, and it’s an offer that they can accept, it is only then they can come to us, and we have some time to figure out if the partner is okay, or if we have other plans,” Puno added.

“In our case, we are also preparing our options, like potentially lining up financing for the right of first refusal. If we don’t like the partner, if we feel there’s less than compatibility with the partner, then we are also talking to potential partners that we can bring in, that’s our preferred choice,” he said.

Puno stressed that these have been in the drawing table for a long time. “All of these options, we are seriously considering because this process is already taking a long time,” he said.

“But certainly from our perspective, we have an existing joint venture with BG which we expect the new partner, if we accept them as a new partner, to respect,” he said.

According to Puno, there are a number of potential bidders for the BG share.

Among the major considerations in getting a partner, Puno said, are that “among the priorities would be partners who have a common interest with First Gas and First Gen.”

“From our perspective, we have to choose who will be a preferred partner, who will think the same as us, the opportunities that we want to pursue, how we create value for our shareholders,” he said.

He said they are still uncertain which option to take with regard to BG’s sale.

“If the price is good, we would be doing it ourselves. If the price is high, we will be most likely getting a partner because the partner will be willing to pay more and with premium,” he said.

Lopez-controlled First Gen is the largest Filipino-owned and controlled independent power producer with over 2,500 MW in its portfolio.

It is also the country’s leading clean and renewable energy company with power generating assets that use mainly environmentally-friendly fuels such as natural gas, geothermal and hydro.