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Basic Energy extends P55-M credit line with China Bank
In a disclosure to the Philippine Stock Exchange, Basic Energy said its board approved the renewal of a P50-million clean loan line and a P5-million bills purchase line with Chinabank.
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Basic Energy extends P55-M credit line with China Bank

Danessa Rivera (The Philippine Star) - January 29, 2017 - 12:00am

MANILA, Philippines - Publicly-listed Basic Energy Corp. is extending its P55-million credit line with China Banking Corp., giving it leeway in funding future projects.

In a disclosure to the Philippine Stock Exchange, Basic Energy said its board approved the renewal of a P50-million clean loan line and a P5-million bills purchase line with Chinabank.

The renewal means both debt funding would be available until October 2018, Basic Energy senior vice president and general manager Anthony Cuaycong said in a phone interview yesterday.

Originally, the debt lines – which are being reviewed by the bank annually – were scheduled to expire in October this year.

Cuaycong said Chinabank extended the facility due to the company’s solid relationship with the bank.

And extending the credit line allows the company to additional access to funding for projects, he said.

“Generally, if you’re going to evaluate investment in project, equity is more expensive than debt. So if you are trying to make efficient use of funds at your disposal, you’d want to have a mix (of both),” the company official said.

In particular, the P50-million clean loan line – which allows the company to borrow without collateral – has not been used by Basic Energy.

“That line has not been used. It just allows us to use [the credit facility] should there be any reason. For example, if Basic needs equity,” Cuaycong said.

Meanwhile, the bills purchase line is a standard practice in accounting finance which allows any entity to avail funds before checks are cleared by banks, the company official said.

Currently, Basic Energy is working on a pipeline of geothermal and solar-powered projects.

The company has five geothermal service contracts: the Mabini Geothermal Service Contract in Batangas, East Mankayan Geothermal Prospect in Ifugao, Mt. Mariveles Geothermal Project in Bataan, Mt. Iriga Geothermal Project in Albay and West Bulusan Geothermal Prospect in Sorsogon.

For the Mabini project, Basic Energy has partnered with Trans-Asia Oil and Energy Development Corp. to develop the prospect where both companies have started drilling.

The Iriga project has also been farmed out, with Desco Inc. taking an 80 percent interest in the project.

Meanwhile, the three remaining projects – East Mankayan, West Bulusan and Mariveles – are still 100 percent owned by Basic Energy.

In March 2016, Basic Energy partnered with German-backed solar developer nv vogt Singapore Pte. Ltd to look at the potential of doing a solar project in one of those properties.

BASIC ENERGY
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