First Metro Sells 20% Stake at Global Power to Meralco PowerGen

Makati—(PHStocks)—First Metro Investment Corp. (First Metro) and Meralco PowerGen Corp. (MGen) have signed a Shareholders’ Agreement (SHA) to complete the sale of First Metro’s 20% stake in Global Business Power Corp. (Global Power) to MGen. The SHA was signed together with GT Capital Holdings Inc. (PSE: GTCAP), ORIX Corp. of Japan (ORIX) and Global Power. The transaction is valued at PhP7.15bn.

MGen is a wholly-owned subsidiary and the power generation arm of Manila Electric Co. (MERALCO, PSE: MER) while First Metro is the investment banking subsidiary of the Metropolitan Bank & Trust Co. (Metrobank, PSE: MBT). The sale comes after the recently concluded purchase by ORIX of 20% of Global Power last June 27, 2013.

Global Power Chairman Francisco C. Sebastian explained, “Having completed 10 years of operations, Global Power emerges into a new world of opportunities as it broadens and deepens its commitment in the power sector. We are privileged to have Meralco as a strategic partner, not just for its heft and financial muscle, but for our shared vision of empowering the economic progress of our country and the uplifting, through light and power, of the lives of our countrymen. Let it be said that with this partnership, the Metrobank Group and Meralco have joined hands, and forces, to do even greater good, and fulfill their role in the power industry that is very critical to the future of the Philippines and its people.”

MGen President Oscar S. Reyes commented, “The completion of the deal seals a strategic alliance that will combine the resources and expertise of both MGen and Global Power to respond to the growing need of ensuring a stable supply of reliable and cost-competitive power for the country, particularly the Visayas and Mindanao.”

The signatories in the SHA included MGen President Oscar S. Reyes, MGen Senior Vice President Angelito U. Lantin, First Metro Chairman Francisco C. Sebastian, First Metro President Roberto Juanchito T. Dispo, Global Power Vice-Chairman Antonio S. Abacan Jr., Global Power Executive Vice President Jaime T. Azurin, GT Capital President Carmelo Maria Luza Bautista, GT Capital Vice President Jose B. Crisol and ORIX Director Hidetake Takahashi.

The signing was also witnessed by MGen Director Atty. Ray C. Espinosa, MGen Senior Vice President Marcos Yorobe and First Metro Senior Vice President Justino Juan R. Ocampo.

Early this year MGen and Global Power signed a Memorandum of Understanding (MOU) to pursue selected power generation projects in Mindanao.

The resulting ownership structure of Global Power will be as follows, First Metro with 9.11%, ORIX with 20%, MGen with 20% and GT Capital retaining its majority ownership at 50.89%. GT Capital is the listed investment holding company of the Ty family, the component businesses of which include Global Power, Metrobank, Toyota Motor Philippines, Federal Land Inc., Philippine AXA Life Insurance Corp., and Charter Ping An Insurance Corp.

Global Power is one of the largest independent power producers in the Visayas. It currently owns and operates nine power plants with a total installed capacity of 627MW. From a 230-MW mainly bunker fuel capacity in 2006, the company has completed a 410-MW expansion program for its plants, utilizing clean coal-fired technology. The expanded plants commenced commercial operations in 2011. Two expansion projects are on stream: an 82MW plant in Toledo City and a 150MW expansion in Panay.

Global Power’s major plants are located in Toledo City in Cebu and in Iloilo City in Panay Island, supplying power to private utility companies such as Visayan Electric Co. (VECO) and Panay Electric Co. (PECO), export and industrial zones in Mactan and Balamban, mining and industrial companies like Carmen Copper Corp. (CCC) and Philippine Phosphate Fertilizer Corp. (Philphos) as well as electric cooperatives in most Visayan islands.

MGen plans to develop a diversified power portfolio of up to 2.7GW from now until 2020 as part of an overall strategy to ensure that power generation for the Luzon Grid, particularly the Meralco franchise area, is sustainable, efficient and highly cost competitive for the benefit of its customers.

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