Ayala Group finalizes sale of coal plant

Danessa Rivera (The Philippine Star) - March 9, 2021 - 12:00am

MANILA, Philippines — The Ayala Group has firmed up its divestment of the 4x135-megawatt (MW) coal-fired power plant in Lanao del Norte in Mindanao for at least $450 million as part of its transition to a lower carbon portfolio.

In a disclosure to the Philippine Stock Exchange yesterday, Ayala Corp. said its power unit AC Energy and Infrastructure Corp. (ACEIC) signed an agreement with Power Partners Ltd. Co. to transfer its indirect ownership interest in GN Power Kauswagan Ltd. Co. (GNPK).

This follows the binding agreement signed by the same parties for the transfer of its indirect ownership interest in GNPK project in favor of Power Partners in July 2019.

Power Partners is ACEIC’s existing developer-partner in the GNPK project.

“The transfer will be implemented through the acquisition by Power Partners and its affiliates of offshore companies owned by AC Energy (ACEIC), which offshore companies own partnership interests in Kauswagan Power Holding Ltd. Co., the majority limited partner in GNPK,” Power Partners said.

ACEIC said its indirect ownership interest would be sold at $453.23 million as the base selling price, which is subject to agreed adjustment. The transfer will be implemented in tranches with the purchase price to be paid on a deferred basis.

As part of the divestment agreement, the Ayala power unit will also sell the project site for the GNPK project to PMR Group Retirement Plan Inc., the retirement company affiliated with the GNPower companies, for $15.9 million.

The transfer is subject to the approval by the Philippine Competition Commission (PCC) and project lenders and completion of the restructuring of ACEIC’s ownership interest in the GNPK project.

ACEIC has already secured the nod of the PCC and project lenders. Meanwhile, its restructuring is still ongoing.

“The transfer of AC Energy’s interest in the GNPK project is part of ACEIC ‘s plan to rebalance its generation portfolio as it aims to grow its renewable energy assets with a target of achieving at least five gigawatts (GW) of attributable renewable energy capacity by 2025,” ACEIC said.

The Ayala power unit has been gradually unloading its stake in its thermal energy platform, AA Thermal Inc. since 2019.

AA Thermal housed conventional power projects namely the 668-MW GN Power Dinginin Ltd. Co. coal plant in Bataan, the 604-MW GNPower Mariveles, the 4x135-MW GNPK project and the 2x135-megawatt (MW) coal-fired power plant in Calaca, Batangas under South Luzon Thermal Energy Corp. (SLTEC).

In 2019, ACEIC sold part of its stake in AA Thermal to Aboitiz Power Corp. for $579.2 million to pursue its expansion of renewable energy projects. The deal with AboitizPower covered GNPower Mariveles and GNPowerDinginin.

Last year, ACEIC launched an Environment and Social Policy (E&S), which aims to transition to a low carbon portfolio by 2030.

Aligned with the United Nations Sustainable Development Goals, the policy will be integrated into the company’s business strategies, performance management and governance.

With the adoption of the E&S policy, the company will be focusing on renewable investments and will not be making additional investments in coal plants, AC Energy Philippines president and CEO Eric Francia earlier said.

Meanwhile, ACEIC’s unit AC Energy Corp. (ACEN) is putting in more investments in wholly owned subsidiary Giga Ace 4 Inc., a special purpose vehicle for the company’s development projects.

In a separate disclosure, ACEN said it signed an agreement with Giga Ace 4 for the subscription of 43.975 million common A shares and 395.96 million redeemable preferred A shares to be issued out of the increase in authorized capital stock of the wholly owned unit.

The subscription will cost P219.88 billion for the common A shares and P1.98 billion for the RPS A or a total of P2.2 billion, which will be paid in tranches. Partial payment of P549.95 million will be paid until April.

ACEN said its subscription would be used by Giga Ace 4 to fund the requirements of the 2x20 MW Alaminos Battery Energy Storage System (BESS) project.

The Ayala group had previously announced plans to explore the development of energy storage technology to complement its renewable energy projects.

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