First Gen Corp signs $142-million syndicated loan

MANILA, Philippines - First Gen Corp., the power generation unit of the Lopez Group, signed yesterday a syndicated loan worth $142 million.

In its disclosure to the Philippine Stock Exchange (PSE), First Gen said the loan will carry six- and seven-year floating rate, with a grace period of 74 and 36 months from drawdown, respectively.

The loan was arranged by BDO Capital & Investment Corp. as issue manager and sole bookrunner.

The company said the loan will also be undertaken with a consortium of foreign and commercial banks composed of Banco de Oro, Security Bank, Bank of the Phitippine lstands, Maybank, RizaI CommerciaI Banking Corp., Union Bank of the Philippines, Mizuho Corporate Bank, Allied Bank Corp. and Robinsons Savings Bank. 

First Gen said the proceeds of the loan will be used to fund investments and capital requirements for various growth initiatives of  the company, as well as partially refinance outstanding indebtedness.

First Gen said its ability to borrow has strengthened as its income performance has improved over the past months. In the first half of 2010, it posted a 158 percent increase in net income to $50 million from $19.4 million in the same period in 2009.

The company attributed the improvement in earnings to higher sales during the period under review as consolidated revenues jumped 24 percent to $655.4 million from last year’s $526.3 million.

Revenues from the sale of electricity by the 1,000-megawatt Santa Rita and the 500-MW San Lorenzo gas-fired power plants increased 16 percent to $599.1 million in 2010 from $517 million in 2009. 

The first half earnings of First Gen were further supplemented by the improved financial performance of its affiliates, Energy Development Corp. (EDC) and First Gen Hydro Power Corp. (FG Hydro). EDC contributed $36.5 million in 2010, up by $12.9 million as compared to $23.6 million in 2009, due to the increase in electricity sales from its 192.5-MW Palinpinon and 112-MW Tongonan geothermal power plants which were acquired in September 2009. 

Adding to the positive variance is a hefty improvement in FG Hydro’s income contribution to First Gen, which increased by $14.9 million from $3 million in 2009 to $17.9 million in 2010. This increase in FG Hydro’s income was due to better prices in the wholesale electricity spot market (WESM).