MANILA, Philippines — Ayala-led ACEN Corp. is handing out option agreements to institutional investors in a bid to facilitate the early decommissioning of one of its coal plants.
The details of the move were announced in a disclosure sent to the Philippine Stock Exchange on Tuesday.
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The option agreements handed out to investors of the Ayala group’s power generation arm for the 246-megawatt coal plant — the Insular Life Assurance Company Ltd. and ETM Philippines Holdings Inc. — will enable call and put options for the companies.
Simply put, a call option gives shareholders the right to purchase stock while a put option enables them to sell.
ACEN subsidiary South Luzon Thermal Energy Corporation redeemed 32 million SLTEC preferred shares from its parent totaling P3.2 billion.
“The Option Agreements entitle ACEN and the Investors, severally, to exercise call and put options, respectively, based on certain pre-agreed conditions, in order to enable the early retirement of the coal plant by 2040, and its transition to a cleaner technology,” the disclosure read.
This move is in line with ACEN’s framework to introduce more renewables into the company’s portfolio. The Philippine government is targeting renewable energy to account for 35% of its energy mix by 2030. As of 2020, renewables account for 24% of the country’s total energy basket, dominated by hydropower.
As it is, the move will remove the coal plant owned by SLTEC from the company’s books.
Back in October last year, ACEN ordered management to quicken the retirement of the SLTEC coal plant by 2040 through an energy transition mechanism. The decommissioning put the coal plant 15 years ahead of its projected lifespan.
The mechanism was developed by the Asian Development Bank to facilitate decommissioning of coal plants and reinvest proceeds into renewable energy projects.