AES sells minority stake in Masinloc to Thai group

MANILA, Philippines - American energy giant AES Corp. is selling a 45 percent stake in the 630-megawatt Masinloc coal-fired power plant to Electricity Generating Public Co. Ltd. (EGCO) Group of Thailand for $453 million.

In a statement, AES said the sale includes indirect stakes in the following: the 630-MW Masinloc coal-fired power plant in operation since 1998; expansion of the existing Masinloc facility; and approximately 60 MW of potential energy storage projects in advanced development.

After the sale, which is expected to be completed in the third quarter of the year, AES will own a 51 percent stake in the Zambales-based plant while the EGCO Group will own 41 percent. The International Finance Corp. (IFC) will retain eight percent.

AES and EGCO Group have agreed to use the Masinloc platform as their exclusive vehicle for growth in the Philippines.

AES president and chief executive officer Andrés Gluski said both companies see strong growth opportunities in the Philippines.

“This transaction demonstrates how we are executing on our strategy, by bringing in partners to realize the value of our portfolio and capitalize on the growth potential across our markets.  We see attractive growth opportunities in the Philippines and are well-positioned to invest in the expansion of our existing plant, as well as energy storage projects, with our partners,” Gluski said.

In 2008, AES purchased a 92 percent interest in Masinloc, with IFC as minority partner, for a total enterprise value of $1.1 billion, the company said.

Since the acquisition, AES has been successful in rehabilitating and operating the plant and is credited for its commercial, operations, which has made Masinloc a significant contributor of earnings and cash distributions, as well as a reliable provider of power in the Philippines, the company added.

The sale of its minority stake to EGCO follows AES’ move to relocate its Asia Strategic Business Unit (SBU) headquarters to Manila.

Scott Kicker, president of AES’ Asia SBU said the move to transfer to Manila is meant to generate cost savings and to demonstrate the company’s commitment to growing in the Philippines.

“The Philippines continues to experience robust economic growth, resulting in increasing demand for energy, which creates a great opportunity for companies like AES and EGCO to meet these needs by providing safe, reliable and affordable energy,” he said.

 â€œWith this strategic partnership, we look forward to pursuing growth opportunities that will help meet the country’s growing demand for energy,” he added.

“This transaction is expected to close in the third quarter of 2014.  AES expects to invest the proceeds, after any closing price adjustments, in a credit neutral manner consistent with its capital allocation framework.  The transaction is expected to be earnings neutral in 2014 and beyond,” the company said.