GMA hails sale of Mirant assets

President Arroyo hailed yesterday the sale of US-based Mirant Corp.’s power plants in the Philippines to a Japanese consortium led by Tokyo Electric Power Co. (TEPCO) and Marubeni Corp., saying this would seal the stability of electric power in the Luzon area over the long term.

The President welcomed the Japanese investors as "true allies for progress and prosperity" and thanked Mirant for being a "superb corporate citizen" of the country.

"This is the peak of business confidence and is clear proof that we are on the runway to economic takeoff on the back of growing political stability," she said.

She said the "happy development" came on the heels of Prime Minister Shinzo Abe’s commitment of huge development assistance to the Philippines, combined with investments such as this power venture "to build a formidable alliance" as exemplified by the Japan-Philippines Economic Partnership Agreement (JPEPA).

TEPCO and Marubeni beat rival groups led by fellow Japanese trading company Mitsubishi Corp., Korea Electric Power Corp. the UK’s International Power and AES Corp., a US-based power producer.

The winning consortium raised its joint bid for the power plants of Mirant to $3.4 billion from $2.85 billion, prompting Mitsubishi Corp.’s One Energy Group to drop its offer.

"We welcome the confidence shown in the Philippines by well-known and highly experienced Japanese energy companies through their purchase of Mirant’s power businesses in Luzon. The country undoubtedly had gained through the entry of a set of internationally recognized participants in the Philippine energy sector," Energy Secretary Raphael Lotilla said.

He said they are optimistic the new owners of Mirant’s power plants would be able to run the assets efficiently.

"While the sale is essentially a private business transaction, we are confident that the Japanese consortium is financially and technically qualified to perform its contractual obligations to the National Power Corp.," he said.

He said this early, the TEPCO-Marubeni consortium has also indicated plans to expand the capacity of the power facilities. "The group has expressed its commitment to the expansion of its power generation assets in the Philippines, thus helping ensure adequate power supply for the future."

The energy chief noted that Marubeni is an old hand in the Philippines and has been doing business here since 1909.

"Marubeni’s expansion is as most welcome as the new entry of TEPCO in the power sector. Marubeni owns stakes in several power generation companies while TEPCO is a well-established energy company in Japan," he said.

According to Lotilla, the new owners of Mirant assets have also committed to continue its corporate social responsibility (CSR) projects in the country.

"In the same manner that Mirant had shown its commitment to the President’s rural electrification program, the government also anticipates that the new owner will continue and deepen this social commitment to help improve the economy in the rural areas," he added.

With the successful bidding of Mirant, Lotilla said he is also confident that other investors would likewise the assets of Napocor.

"I’m inviting the rest of the bidders for Mirant Philippines to strongly consider other investment opportunities in the Philippine power sector," he added.

Mirant’s Philippine assets include the 1,218-megawatt (MW) coal-fired power plant in Sual, Pangasinan, the 735-MW coal-fired power plant in Pagbilao, Quezon, and a 20-percent stake in the Ilijan, Batangas natural gas facility.

The Atlanta-based Mirant Corp. formally announced yesterday the sale of its Philippine business to the Marubeni-TEPCO group at $3.424 billion.

After the payment of related debt (estimated at $642 million), the net proceeds to Mirant are expected to be $3.152 billion.

The transaction is expected to close in the second quarter of 2007 after the satisfaction of certain conditions, including the Sual plant being operational. Mirant’s financial advisor for the sale is Credit Suisse.

"The Philippines is a good environment for foreign investment and has been a wonderful place for us to do business," Mirant chairman and chief executive officer Edward R. Muller said.

"We wish the Tokyo Electric- Marubeni consortium and the Philippine people great success."

Mirant is a competitive energy company that produces and sells electricity in the United States, the Caribbean, and the Philippines. Mirant owns or leases approximately 17,300 MW of electric generating capacity globally.

The sale may help appease Mirant shareholders who have been demanding the company buy back stock or pay dividends. Mirant’s plants have contracts with the Philippine government to supply power for about 20 years.

Mirant is selling its assets after emerging from bankruptcy in January. It’s three plants in the Philippines have a combined capacity of 2,203 MW, making the company the second-biggest power producer in the Philippines after the government.

Mirant scrapped an unsolicited $7.86 billion bid for RG Energy Inc. in June after a shareholder revolt, and started a $1.25 billion share repurchase and auction of assets in the Philippines and the Caribbean, the company said in July. – With Eva Visperas