Basic Energy investing P180 million for 15% stake in Thai contractors

MANILA, Philippines — Basic Energy Corp. (BEC) is investing nearly P180 million for its 15 percent stake in Thai engineering, procurement and construction (EPC) contractors to bring in steady revenue stream for the company.

In a disclosure to the Philippine Stock Exchange, BEC said it is targeting to execute a share purchase agreement (SPA) with Vintage EPC Co. Ltd. and and a shareholders’ agreement with VTE International Construction Co. Ltd. within the next two months.

Under the SPA, BEC will acquire 7.5 million shares in Vintage EPC through a share purchase from parent firm Vintage Engineering Public Co. Ltd. (VTE) of Thailand for a total consideration of 75 million Thai baht or P125.93 million.

Meanwhile, the company will purchase 3.12 million shares from the share issuance of VTE International worth 31.185 million Thai baht or P52.36 million.

The total investment amounts to 106.185 million Thai baht or P178.3 million.

BEC said the equity investments in the two Thai EPC contractors would enhance its project portfolio as a renewable energy and power company.

Currently, the two companies are the primary EPC contractors for the 220-megawatt (MW) solar power plant in Minbu District, Magway region, Myanmar.

“The investment is expected to provide a continuing stream of revenues in the short and midterm for the company,” BEC said.

Meanwhile, BEC’s entry into the EPC firms will increase the  working capital of these companies needed to pursue the requirements of their respective contracts related to the solar power plant being built.

The design and construction of the project started in 2016 and was planned to be completed in four phases of 50 MW for Phases 1, 2 and 3 and 70 MW for Phase 4.

Phase 1 is ongoing with a targeted completion date of year-end 2018. The subsequent phases shall be pursued after completion of the previous phases to achieve full completion of the four phases on or before 2021.

In November 2017, the company signed a term sheet with VTE, as the owner of the companies, to start the necessary due diligence.

It has also remitted $2.622 million (P136 million) as earnest money deposit and for the completion of the due diligence work on the companies.

BEC has been scouting for solar power investments here and abroad to provide revenue stream while developing geothermal prospects, which have a long gestation periods.

Currently, the company has five geothermal service contracts, namely the Mabini Geothermal Service Contract (SC) in Batangas, East Mankayan Geothermal Prospect in Ifugao, Mt. Mariveles Geothermal Project in Bataan, Mt. Iriga Geothermal Project in Albay and West Bulusan Geothermal Prospect in Sorsogon.