Power retailer Manila Electric Co. (Meralco) said Tuesday it will draw from its P75-billion credit facility with BDO Unibank Inc., Bank of the Philippine Islands and Metropolitan Bank and Trust Co. within the week to finance its investments.
These include the acquisition of its subsidiary of a stake in two gas-fired power plants and a liquefied natural gas (LNG) terminal.
“The credit facility, which has a maximum amount of P75 billion, is payable in 12 years. The loan will be used to finance investments and other general corporate purposes of the company,” Meralco said in a disclosure to the stock exchange.
Meralco is the parent firm of Meralco PowerGen Corp. which owns a 60-percent stake in Chromite Gas Holdings Inc.
Chromite is investing in two gas-fired power plants owned by San Miguel Global Power Holdings Corp. (SMGP), specifically the 1,278-megawatt (MW) Ilijan power plant and a new 1,320-MW combined cycle power facility under Excellent Energy Resources Inc, that is currently under construction.
Chromite, together with SMGP, will also invest in the LNG import and regasification terminal owned by Linseed Field Corp.
Meralco senior vice president and chief finance officer Betty Sy-Yap said the credit facility will be used to finance “the acquisition of investments in Project Chromite.”
“P75 billion will be drawn within the week,” Sy-Yap said.
Meralco PowerGen Corp. president Emmanuel Rubio earlier said that following the Philippine Competition Commission’s (PCC) decision allowing the three conglomerates to proceed with their joint acquisition of the LNG assets, they “will be working on conditions precedent to closing.”
“We are looking at closing by end of January,” Rubio said.
The PCC approved last month the joint acquisition of power facilities and a LNG terminal subject to certain conditions.
The PCC emphasized that while the transaction supports the country’s energy security, the imposed conditions are vital to maintaining a competitive market.
Key safeguards include PCC oversight of the competitive selection process (CSP) to ensure power supply agreements are awarded through a transparent and competitive bidding process. This oversight aims to prevent collusion or unfair practices.
The PCC said the acquired companies should also operate independently of their parent companies, with strict measures to separate IT systems, offices, and management to prevent coordination or undue influence. Boards of directors will include independent members, and internal trading units will operate independently of affiliates.
