SLTEC redeems P3.2 billion ACEN preferred shares

MANILA, Philippines — South Luzon Thermal Energy Corp. (SLTEC) has redeemed P3.2-billion worth of preferred shares owned by ACEN Corp. as part of the energy transition mechanism, which will enable the early retirement of the company’s coal power plant in Batangas.

SLTEC is a wholly owned subsidiary of ACEN, which owns and operates a 246-megawatt (MW) circulating fluidized bed thermal power plant in Calaca, Batangas.

SLTEC’s redemption of its 32 million preferred shares from ACEN will enable the return of P3.2 billion in capital to ACEN, which the Ayala Group’s listed energy platform can use to fund new renewable energy investments.

ACEN said redemption of the remaining 3.83 million preferred shares in SLTEC is expected to close by end of the year.

“The energy transition mechanism (ETM) will ultimately result in the early retirement of the 246-MW SLTEC coal plant by 2040, 15 years ahead of the end of its technical life, which will help ACEN to fulfill its commitment to achieve net zero greenhouse gas emission by 2050 or earlier,” the company said.

ACEN’s board in October last year authorized its management to work toward the early retirement of the SLTEC coal plant by 2040 through the use of an ETM.

The 244-MW coal plant in Batangas is the only coal plant in ACEN’s portfolio.

The ETM is an innovative concept developed by the Asian Development Bank, which aims to leverage low cost and long-term funding geared towards early coal retirement and reinvestment of proceeds to enable renewable energy.

The equity divestment feature of the ETM includes the redemption of SLTEC preferred shares held by ACEN using proceeds of subscriptions from institutional investors.

ACEN said proceeds received by the company would be deployed for its renewable energy investments.

ACEN, which currently has about 3,400-MW of attributable renewable energy capacity, is working to become the largest listed renewables platform in Southeast Asia, with a target of building 5,000-MW of renewables by 2025.