SMC completes $300-M bond offering of power subsidiary

MANILA, Philippines –  Diversifying conglomerate San Miguel Corp. (SMC) reported yesterday that it has completed the $300-million bond offering of its power subsidiary, SMC Global Power Holdings Corp.

In a disclosure to the Philippine Stock Exchange (PSE), SMC said the bond offering has fetched an interest rate of seven percent for the five-year issue.

SMC has said that proceeds from the offering would be used to finance its investments in power-related assets.

Proceeds from the offer will be used “for financing investments in power related assets, financing payment or prepayment of obligation with the Power Sector Assets and Liabilities Management Corp. (PSALM) and/or general corporate purposes.”

According to SMC, the bond issue has been listed in the Singapore Exchange Securities Trading Ltd.

SMC Global Power also noted that it does not intend to register any securities subject of the proposed bond issue under the US Securities Act and the Philippine Securities Regulation Code.

SMC won the IPP contract for the 1,200-MW Sual coal-fired power plant in Pangasinan. As an IPP administrator, it is in charge of procuring the coal requirement of the said power facility.

In March 2010, SMC bought 100 percent of the outstanding capital of Daguma Agro Minerals Inc., headed by businessman Ben Guingona.

Daguma Agro owns a coal mine in South Cotabato and Sultan Kudarat, an area known for its rich coal deposits.

SMC likewise purchased shares at Bonanza Energy Resources, Inc., which operates the nearby coal concession also in the Daguma area.

The SMC group also acquired Sultan Energy Philippines Corp. from the group led by businessman Frederick Lu. Sultan’s coal mine is located beside the coal concession areas owned by Daguma Agro and Bonanza Energy.

“We’re in the process of consolidating all the coal mines in the area so that we will be able to know exact deposit of these coal deposits. Once we know the volume, we can start with the mine mouth (power plant),” SMC president Ramon Ang said.

SMC is now the biggest power producer in the country, having won other big ticket IPP contracts auctioned off by the government for the past months such as the San Roque hydropower plant and the Ilijan natural gas power facility.

It also owns and operates the 620-MW Limay diesel power plant in Bataan.