First Gen says no deal yet with British Gas

MANILA, Philippines - First Gen Corp., the power generation arm of the Lopez Group, said it would evaluate any agreement entered by British Gas Plc for the sale of its stake in the company’s assets.

In a disclosure to the Philippine Stock Exchange First Gen said “BG’s proposed sale to Korea Electric Power Corp. (Kepco) of its 40 percent equity in the First Gen assets is not in accordance with the requirements of the joint venture agreements with BG Energy Holdings Inc. (BG).”

“Nevertheless, we reiterate our previous pronouncements that First Gen and its parent First Philippine Holdings Corp. (FPHC) continue to evaluate their rights and options in respect of BG’s contemplate divestment of its interests in the 1,000 megawatt (MW) Santa Rita and 500-MW San Lorenzo gas-fired power plants located in Batangas City,” it said.

Puno reiterated earlier statements made by First Gen that FPHC is evaluating all options available to it with respect to the proposed BG divestment, including whether or not to issue the requested waivers and consents or to acquire the BG stake itself based on pricing and terms mutually acceptable among the parties.

It would be recalled that Korea Electric Power Corp. (Kepco) has bought the 40 percent stake of BG in the natural gas power plants of First Gen for $400 million.

But First Gen said it has yet to approve the entry of Kepco in the Sta. Rita and San Lorenzo power plant projects.

FPHC and First Gen own the remaining 60 percent stake in the gas power plants.

The Lopez power firms said they were informed that the $400 million net consideration offered by Kepco is “subject to standard completion adjustments, including interest to be paid to BG Group upon closing which is expected in the first quarter.”

“First Philippine Holdings and First Gen are evaluating their rights and options in respect to BG’s contemplated divestment of its interests in Sta. Rita and San Lorenzo,” the companies said.

Earlier, First Gen said it may not be able to join forces with Kepco as this may result to some legal issues.

“Although Kepco is a well-respected company, we have to understand what their plans are, and if it runs with conflict with our plans, then that partnership with Kepco may not be necessarily be feasible,” First Gen president Francis Giles Puno earlier said.

It would be noted that both First Gen, through its subsidiary First Gas Corp., and Kepco, through its arm Kepco-Ilijan Philippines Inc., have stakes in the natural gas industry.

Their engagement in natural gas businesses makes the two firms basically “competitors” with each other. This may result to some problems in reconciling their business agenda if they would partner with each other in buying the BG Group’s stake in First Gas.