Consortium to acquire up to 47.5% of EDC outstanding shares
at Php7.25/sh through tender offer
FGEN announced today that Philippines Renewable Energy Holdings Corporation (a consortium
of investors comprising of Macquarie Infrastructure and Real Assets and Arran Investment Pte
Ltd, an affiliate of GIC) has agreed to acquire, through a tender offer, a minimum of 6.6Bil common
shares up to a maximum of 8.9Bil common shares of EDC. This represents 35.2% up to 47.5% of
total outstanding common shares of EDC. The bidder is offering a price of Php7.25/sh to EDC
shareholders, which is a 22.3% premium to EDC’s last 30-day volume weighted average market
price of Php5.93/sh. FGEN said that it will be tendering 10.6% of the total common shares in
EDC, and expects to receive Php14Bil from the sale. FGEN expects to maintain its control over
EDC as it will retain a 60% voting stake in EDC (through its voting preferred shares). The tender
offer period begins at 9.00am on August 10, 2017 and closes at 12:00pm on September 18, 2017.
Positive for EDC’s share price
The transaction will clearly be beneficial for EDC’s share price given it’s a 22% premium over
EDC’s last traded market price. Assuming that all of the minority shareholders (49.28%) would
want to tender their shares, then scale-back provision will apply. This implies that FGEN will sell
~ 8.41%, while the public minority will sell 39.1%. EDC’s remaining free float in the market will
be reduced from 49.28% to 10.2%. This implies that EDC could be delisted following this tender
offer.
FGEN to benefit for sale poceeds
This tender offer should also benefit FGEN as it will help them raise up to Php14.4Bil, which will
help the company fund the US$200Mil – US$1Bil investment in its LNG re-gasification project.
We believe this is an investment needed to ensure FGEN’s continued growth for its gas plant
power generation business, as well as to avoid the obsolescence of its existing gas plants.