First Holdings gets $50-M funding to redeem notes

First Philippine Holdings Corp. (FPHC), the energy arm of Benpres Holdings Corp., has closed a $50-million funding package to redeem its maturing convertible notes this month.

Ernesto Rufino, FPHC corporate information officer, told the Philippine Stock Exchange that the company has successfully completed the financial closing of its fund-raising activity with Credit Suisse First Boston International as arranger.

CSFB also serves as the financial adviser of FPHC’s parent firm Benpres Holdings for the latter’s Balance Sheet Management Plan designed to address the Lopez-controlled group’s almost $600 million debts.

CSFB arranged the private placement of the guaranteed floating rate notes (FRNs) issued by FPHC’s wholly-owned subsidiary, FPH Fund Corp. The FRN’s, whose coupon rate is indexed against LIBOR (London Interbank Offered Rates) are neither convertible nor exchangeable into shares.

Rufino said in connection with the private placement, FPHC issued share purchase option rights (SPORs) using its $15 million Manila Electric Co. (Meralco) shares as the underlying assets. The SPORs were acquired by an offshore affiliate.

"The net proceeds from the funding activity of $50 million, together with the cash on hand, were used by FPHC to pay its $86 million obligation under the convertible notes, net of the $35 million acquired by the same offshore affiliate," he said.

Analysts said that while the closing of the $50 million package provided a lift, investor sentiment in FPHC is still being weighed down by Benpres’ huge debt problems.

As one of the remaining cash cows of the Lopez Group – aside from ABS-CBN which in itself is under a tight cost-cutting scheme – FPHC is a prime candidate to contribute to the parent firm’s cash build-up.