Solar Philippines NEC suspension will be lifted this morning
The Leandro Leviste solar development company submitted its comprehensive disclosure to the PSE about the massive assets-for-shares swap that Solar Philippines NEC [SPNEC 1.84] recently approved with its parent company, Solar Philippines Power Project Holdings, Inc [SP], and the PSE provided notice that SPNEC’s suspension would be lifted at 10:30 am today (Wednesday).
SPNEC’s disclosures didn’t really add a lot of flavor to the information stew that we were already dealing with for this deal.
SPNEC still only vaguely describes the companies that it will acquire by providing a list of “various entities” that are disclaimer-ed with a big, fat “including but not limited to” before rattling off the same list of names as before, and defining this possibly-incomplete list as the “Solar Philippines Assets”.
We know what SPNEC will pay for the Solar Philippines Assets (24,373,050,000 shares of itself, valued at P2.50/share), but we don’t yet know (specifically) what it is buying.
SPNEC did say, however, that the companies that will comprise the Solar Philippines Assets hold over “30 DOE Solar Energy Service Contracts with over 10 GW of potential capacity”, but then adds (rightfully) that “many of the projects on this list will not materialize, and for those that do, the above may not represent the project’s ultimate planned capacity, which is subject to change”.
SPNEC also provided a little guidance on its upcoming stock rights offering (SRO), which will involve the sale of at least 5,124,832,502 SPNEC shares to the public to avoid violation of SPNEC’s minimum public ownership obligations.
It said that the SRO would happen in Q2 of this year, but that it may still also require an additional equity raise through “private placements with institutional investors” to meet the financing needs of its aggressive development plan.
SPNEC says that this transaction with its parent will allow it to “achieve profitability earlier”, with the aim of making SPNEC more attractive to a “wider base of investors” to improve SPNEC’s “access to capital to support its growth plans”.
MB BOTTOM-LINE
Ok, credit where credit is due: Mr. Leviste moves quickly, and he did very well to lift the suspension for SPNEC shareholders by providing comprehensive disclosure on this transaction quickly.
That said, maybe I’m missing a key bit of data here, but I’m having a hard time finding the capacity and financial data for the SP operating projects that I had hoped would be a part of the comprehensive disclosure, and it seems like SPNEC is still being frustratingly vague on what it is actually planning to acquire.
I also thought the whole point of this transaction was to have SPNEC acquire some operating projects to bring in some cash flow, but this disclosure makes it sound like SPNEC will acquire a bunch of “potential capacity” projects that haven’t even started development yet.
So we went from “listening to shareholder feedback” to acquire a few operating projects, to downloading an amorphous list of operating, brownfield, and greenfield projects, plus an SRO, plus maybe a private placement.
I know that I’m coming off as sounding kind of negative, but the ball is in SPNEC’s court to convince us, the shareholders and investing public, that this move is in our best interest, and I’m just not sure that they’ve done that yet.
We’re probably going to get a lot more information about it heading into the shareholders’ meeting next week, so I’m going to try and be patient for additional color and context to this massive deal.
Until then, though, it feels like SPNEC is being all like “this is great for you” (source: “trust me, bro”).
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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