SB Capital arranges $220-million loan for TeaM Energy

MANILA, Philippines - SB Capital Investment Corp.  has arranged a $220-million, 12-year mezzanine loan facility for TeaM Energy Corp.

Aside from the significant amount raised, the loan facility marks the first time Japanese-owned TeaM Energy tapped the domestic capital market for its funding requirements. Security Bank Corp. and Metropolitan Bank & Trust Co. (Metrobank) were the major lenders for the transaction.

A mezzanine loan is a hybrid of debt and equity financing typically used to finance the expansion of existing companies. If the loan is not paid back in time and in full, the lenders have the right to convert to an ownership or equity interest in the company. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies, and is treated as equity for the borrower, allowing it greater flexibility for future borrowing.

Meanwhile, proceeds from the hybrid loan facility would be used to refinance the company’s existing mezzanine loan facility with PPF Co. B.V. (formerly Nomura Philippines Power Funding Co. B.V.). 

Security Bank president and chief executive officer Alberto Villarosa said the two lenders welcome the opportunity to support TeaM Energy’s projects to produce reliable and stable energy sources.

“The $220-million mezzanine facility achieved a successful financial close despite a very tight timetable,” he added.

TeaM Energy is a joint venture partnership between noted Japanese firms, Marubeni Corp. and Tokyo Electric Power Co. Inc., is one of the largest independent power producers (IPP) in the Philippines, with over 2,000 megawatts (MW) of installed generating capacity.

In June 2007, CrimsonPower Holdings Co. Inc. (later changed to TeaM Energy) signed a mezzanine loan facility agreement with PPF Co. B.V. to partially fund the acquisition of 100 percent ownership in Mirant Asia-Pacific Ltd. (MAPL), then the largest IPP holding company, from US-based Mirant Corp.

TeaM Energy’s power generation portfolio consists of a 100-percent direct interest in the 1,218-MW coal-fired Sual power plant located in Sual, Pangasinan; a 100-percent direct interest in the 735-MW coal-fired Pagbilao power plant in Pagbilao, Quezon; as well as a 20-percent indirect interest in the 1,251-MW natural gas-fired Ilijan power plant located in Ilijan, Batangas.

The National Power Corp. (Napocor) has contracted a significant portion of Sual and Pagbilao’s capacity.

In addition, TeaM Energy also operates an energy supply business group, wherein it markets and sells the excess capacity of Sual and Pagbilao to various distribution utilities and direct users.

SB Capital is the wholly-owned investment banking arm of Security Bank and is currently one of the most active investment houses in the country. SB Capital provides a wide range of investment banking and financial services which include equity and debt underwriting, loans syndication, private placements, advisory and stock brokering services.