Mirant Phils to undertake IPO this year

Mirant Philippines Inc., the country’s largest private power producer, has agreed in principle to undertake an initial public offering (IPO) within this year, Energy Secretary Vincent S. Perez announced yesterday.

"Last Friday, in New York City I had a discussion with Mirant Corp. CEO Marce Fuller and in front of President Arroyo, Fuller committed the Philippine subsidiary Mirant Philippines Inc. will plan to an IPO at the PSE (Philippine Stock Exchange) sometime this year," Perez said, in a press conference after his more than a week of pre-marketing campaign for the National Power Corp. (Napocor) privatization in New York and London.

According to Perez, they have been discussing the terms of the possible shares offering with the local officials of Mirant.

"I have spoken with Ed Bautista, CEO of Mirant Phils. Corp. this morning and I said that this is something that DOE is very keen to see the listing sometime this year," he said.

Perez said they have been contemplating on the possibility of asking Mirant Philippines to undertake an IPO after it posted a hefty earnings in 2000 and became the most profitable local company in the country during that period.

"If you recall Mirant Phils. Corp. reported a net income of P8.5 billion in 2000 according to the SEC (Securities and Exchange Commission), they are the highest net income earner of all corporations in the Philippines. So I would imagine that they would be an ideal candidate for this thing this year and it might be one of the largest IPO on the local stock exchange for 2002," Perez said.

Though details of the planned IPO will still have to be threshed out, it is likely that Mirant Phils. will offer 10-20 percent of its shares to the public.

The energy chief said this move would be a welcome initiative as this will help develop the country’s capital market.

He noted that the PSE composite index is the best performing stock market in the world registering 19.38-percent growth for the month of January.

"We do not go yet to specific details like when they would start getting an underwriter or the size of the offering. But getting the company’s commitment is one thing," he said, noting that this would be one of the biggest listings in the Philippines this year.

He said this might set a precedent for other best performing power companies to follow suit. "Other IPPs (independent power producers) may follow," he said.

The energy secretary said the planned IPO is not expected to have an impact on the planned privatization of IPP contracts of Napocor. "But we have yet to see the parameters of the IPO," he added.

Mirant Philippines, formerly Southern Energy Philippines Inc., has been very active in the local power industry.

As the country’s largest IPP, Mirant Philippines owns 2,500 megawatts (MW) of installed capacity. It owns and operates the 1,218 MW Sual power station in Pangasinan, the 735-MW Pagbilao power station in Quezon, the 210-MW Navotas I and 100 MW Navotas II power stations in Metro Manila and the 15-MW SDC power station in San Ildefonso, Bulacan.

It also owns a stake in the soon-to-be-operational 1,200-MW natural gas-fired Ilijan power station.

Mirant has also indicated plans to participate in the privatization of Napocor but it still has to wait for the approval of the implementing rules and regulations (IRRs) of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA).

As part of its expansion program, Mirant is concentrating on investing for expansion of its gas and coal businesses. It is also one of the IPPs that is actively helping the government in its rural electrification program. Last year, it signed with DOE a MOA to energize at least 53 unenergized barangays in Negros Occidental and Oriental Mindoro under the DOE’s O-Ilaw program.

The MOA with Mirant came amidst the DOE’s commitment to energize at least four barangays a day or about 1,500 barangays more by the end of June 2002.