San Miguel's Global Power Holdings Corporation arm shelves IPO

Sual Power Plant

The country’s biggest power producer SMC Global Power Holdings Corporation is expanding its operation for two new power facilities in southern Davao province and northern Bataan province.

Corporate news from the Business World Online.
"San Miguel’s power arm shelves IPO"

CONGLOMERATE San Miguel Corp.’s power generation arm has shelved a planned initial public offer (IPO) and will instead raise $700 million from the debt market for expansion, senior company officials said yesterday.

SMC Global Power Holdings Corp., the country’s biggest power producer, accounting for about a fifth of the Philippines’ total supply, is seeking funding for two new power facilities with a combined generation capacity of 600 megawatts (MW).

“It’s easier to raise money through borrowing,” said Ferdinand K. Constantino, San Miguel’s chief financial officer, in an interview at the conglomerate’s headquarters.

Volatility in financial markets, with the local stock market nearly erasing this year’s gains before recovering in recent days to climb about 7% this year has made it difficult for SMC Global to pursue its planned share sale.

San Miguel President Ramon S. Ang said the group was unlikely to go to the equity market for any fund raising for the rest of the year, adding a plan to sell more shares in San Miguel Pure Foods Co., Inc. was possible next year.

BUILDING CAPACITY
San Miguel was previously looking to raise as much as $700 million from a planned listing of SMC Global, which the group values at about $1.1 billion, before the end of this year.

SMC Global will build two 300-MW coal-fed plants in southern Davao province and northern Bataan province, with total project cost of $1.1 billion to $1.2 billion, Mr. Constantino said.
About 30% of funding for the projects will come from equity and the balance from debt, he said, without giving further details.

The two projects will increase SMC Global’s total installed capacity to 3,145 MW and are part of its long-term plan to boost capacity by an additional 3,000 MW.

San Miguel, which owns 27% of Manila Electric Co. (Meralco) has no immediate plans of selling more shares in the country’s biggest power utility, Mr. Ang said further.

In July, San Miguel sold a 5.7% stake in Meralco, raising $400 million for expansion plans.

Source: bworldonline

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Photo credits: sanmiguel

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