First Gen income climbs to $25.5M

First Gen Corp., the largest Filipino-owned independent power generation company, has declared a cash dividend of P1.75 per share after it posted a higher net income of $25.5 million in the first quarter of 2006.

During the company’s first stockholders’ meeting yesterday, First Gen vice chairman and chief executive officer Peter Garrucho Jr. said all stockholders of record as of June 2, 2006 will be entitled to the cash dividend.

Garrucho said the company posted an 18- percent increase in net income from $22 million in the first three months of 2005.

The P1.75 per share dividend is two percent higher than the company’s dividend policy of 30 percent of prior year’s recurring net income based on recommendations of the board of directors after considering factors such as debt service requirements, implementation of business plan, operating expenses, budgets, funding for new investments and acquisitions, appropriate reserves and working capital, among others.

In his report to the stockholders, Garrucho said they intend to continue investing in the power sector to further improve earnings in the coming years.

In the next five years, he said they expect to double the company’s existing capacity of about 1,700 megawatts (MW).

He said they would also look into various business opportunities such as the bidding for stakes in power generation companies owned by private companies. Garrucho said they are particularly eyeing the 38-percent stake of STEAG in Mindanao Coal Corp.

"I visited them (STEAG) in Germany to talk with their principals and of course we’ve been talking with their officers here. We understand from them that they would activate this sale of 38 percent once the plant is completed by the end of the year. We indicated that we’ll be very interested in discussing with them about that," he said.

Recently, STEAG said it plans to sell 38 percent of its 89-percent equity in the 210-MW Mindanao Coal.

He said they are looking at other similar opportunities. "Over the past three yeas, companies like Edison Mission, Intergen and El Paso have sold their Philippine assets. We will continue to search and negotiate for such stakes."

The First Gen executive also said they are focusing on the generating assets of the National Power Corp. (Napocor) being sold by the Power Sector Assets and Liabilities Management Corp. (PSALM).

"First Gen actively conducted market analysis, due diligence and investment evaluation of a number of Napocor power plants. We centered around coal-fired, geothermal and hydroelectric power plants," he said.

Based on its unaudited consolidated financial statements, First Gen’s consolidated revenues for the period ended March 31, 2006 rose to $217 million, an increase of 15 percent or $28 million.

The improvement in asset base was attributed to several factors such as the increase in cash and cash equivalents amounting to $305 million that came from internally-generated funds, proceeds from the initial public offering (IPO) and the issuance of the bond. Net proceeds raised from the equity and debt markets amounted to $250 million.