Energy Development Co (EDC)

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In December 2006, the Energy Development Co (EDC) - a subsidiary of Philippine National Oil Company (PNOC) - held its first initial public offering at the Philippine Stock Exchange. Both local and international investors purchased 36% of the company. PNOC-EDC raised approximately US$320 million (Peso 17 billion) of proceeds from the initial offer of 5.2 billion shares. The proceeds increased to more than US$384 million (Peso 19 billion) after a 15% over-allotment option was exercised towards the end of the month. Overall, the company sold about 40% of shares. The mid-December market debut of PNOC-EDC saw a 42% surge in the stock from the offer price of Peso 3.2 a share to the Peso 4.55 a share posted at the close of the opening day of trading. Some 74% of the shares were sold to overseas institutional investors with the remaining 26% being allocated to domestic investors. PNOC-EDC declared Red Vulcan the winning bidder in the November 21, 2007 second company auction. Red Vulcan Holdings Corp. remitted the full payment of US$1.4 billion (Peso 58.5 billion) to PNOC for the government’s 60% stake in the company in November 2007. Red Vulcan Holdings Corp. included the consortium of First Gen Corp., Spalmare Holdings B.V. and Prime Terracota Holdings Corp. First Gen Corp. was 55% owned by the local holding company - First Philippine Holdings Corporation. Spalmare, was First Gen's minority partner in Red Vulcan. It was a joint venture between Icelandic sustainable energy firms Reykjavik Energy Invest (REI) and Geysir Green Energy (GGE). In a statement dated Dec. 28, 2007 and posted on Reykjavik Energy's Web site, the company reported that it decided with Green Geyser to sell their 40% stake in Red Vulcan Holdings Corp to First Gen Corp. Prime Terracota Holdings Corp. was a subsidiary of First Gen Corp. As a result, in November 2007 First Gen solely committed for Red Vulcan the entire US$1.4 billion bid price. First Gen thereby became the 100% owner of Red Vulcan, along with the shares held by its subsidiary, Prime Terracota Holdings Corp. Development Bank of the Philippines and ING extended a staple financing facility of US$650 million (Peso 27.9 billion) to Red Vulcan to fund the acquisition of the controlling stake in PNOC-EDC. Banco de Oro also provided financing for the acquisition along with Calyon and Bank of Tokyo Mitsubishi. In addition, First Gen raised US$300 million from its own funds to bankroll the purchase. PNOC EDC, the largest geothermal producer in the country, had an installed capacity of 1,149.4MW as of December 31, 2007 and represented 60% of the country's total geothermal capacity. On Nov. 25, 2008, IFC signed a US$82 million (4.1 billion Philippine Pesos), 15-year loan to support EDC's acquisition of more geothermal assets. As of Dec. 31, 2008, First Gen, through its Red Vulcan subsidiary, held a 40% economic interest in EDC, which gave First Philippine Hodlings Corporation a 22% effective interest in EDC. In May 2011, the IFC signed a loan of US$75 million to partially finance the project company's medium-term capital expenditure plan. In May 2012, EDC faced an impairment charge of P5 billion for closing down the 49MW Northern Negros Geothermal facility. The facility was underperforming, by generating only 5-10MW. The facility was closed was to be transfered to the company's Nasulo concession area were the firm had a 20MW plant installed, but the concession had the potential to generate up to 45MW. Transfering the Northern Negros plan to Nasulo would allow to utilize this capacity. http://business.inquirer.net/58415/edc-sets-aside-p20b-for-projects-in-2012

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