The Metrobank Group of Companies is merging its power units Panay Power Corp. (PPC) and Avon River Power Holdings Corp., according to documents filed with the Securities and Exchange Commission.
Under the plan, PPC, the surviving entity, will raise its authorized capital stock to P1.3 billion comprising 13 million common shares with a par value of P100 each, from the existing P820 million. Avon River, on the other hand, has a capitalization of P100 million.
Out of the capital hike, PPC shall issue a total of 2.06 million shares at a conversion ratio of 82.26 common shares for every one share of Avon River.
PPC and Avon River said it would be to their best interest to merge into one corporation. Both companies are owned by Claredon Towers Holdings Inc., a wholly-owned unit of the Metrobank Group’s Global Business Power Corp. (GBPC).
GBPC is the largest independent power producer in the Visayas, with a total plant capacity of more than 230 megawatts, using coal and diesel technologies.
PPC was incorporated on June 13, 1996 primarily to engage in the business of generating electric power. It owns and operates a 762-megawatt diesel fuel power plant in La Paz, Iloilo City.
The company has a power purchase agreement with Panay Electric Co. Inc. under which it will purchase in each contract year from the start of commercial operations a minimum number of kilowatt-hours of net electrical output for a period of 25 years.
In the three months ending March this year, PPC incurred a net loss of P8.78 million, a reversal from the P107.11 million net income reported in the same period a year ago. The company’s poor showing was attributed to higher expenses and lower fees.
Avon River, on the other hand, has an electric power purchase agreement with Iloilo Electric Cooperative Inc. to supply electricity for a period of 20 years. It also has a similar deal with Aklan Electric Cooperative.