SP New Energy [SPNEC 1.10, down 2.6%; 92% avgVol] [link], now a Meralco [MER 374.80 unch; 80% avgVol] subsidiary under Manny V. Pangilinan’s chairmanship, confirmed reports that it plans to sell “up to 40% equity stake in the Terra Solar” project. The report quoted MVP as saying that SPNEC was in talks with three to five potential investors, and then quoted an unnamed executive who said that SPNEC would take in “at most” two of those potential foreign investors for a combined 40% stake in Terra Solar. MVP said that they were trying to engineer it so that each foreign partner might take a 20% stake. MVP noted that SPNEC still intends to meet its 2026 energization target.
MB bottom-line: Not much here has changed. One key here is that MVP and the gang are talking about bringing those investors in at the Terra Solar project level, not at the SPNEC level. I’ve seen a few commenters around in the forums trying to speculate about how a 40% stake sale at the SPNEC level would impact the stock, but that’s not what SPNEC is contemplating here. They’re looking to sell a 40% stake in a private subsidiary. Why 40%? Because the Terra Solar project owns land and foreigners cannot own more than a 40% interest in corporations that own land. This isn’t a case of MER just looking to monetize a chunk of its new toy; MVP and MER have already said that they need to sell this equity stake to finance the development of the project. So this will need to get done, probably sooner rather than later.
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