AC Energy Inc., the energy unit of Ayala Group, signed Wednesday an agreement to acquire a majority stake in Phinma Energy Corp. for P3.42 billion.
AC Energy said it would acquire Phinma’s combined 51.48-percent stake in Phinma Energy via a secondary share sale. The Ayala unit signed the agreement with Phinma Corp. and Philippine Investment Management Inc.
“Phinma was one of our early partners when Ayala was new to the power sector. This partnership has prospered over the last eight years and we welcome the opportunity to now integrate Phinma Energy into AC Energy’s platform as we grow our presence in the power generation sector,” said Ayala Corp. chairman and chief executive Jaime Augusto Zobel de Ayala.
The parties said this was based on the valuation date of Dec. 31, 2018 and would be subject to adjustments.
Ayala and Phinma said in separate disclosures to the stock exchange the closing of the transaction would be subject to satisfaction of certain conditions, such as regulatory approvals, including the approval of the Philippine Competition Commission and compliance with applicable tender offer requirements,
AC Energy will also subscribe to 2.632 billion Phinma Energy primary shares.
AC Energy and Phinma Energy started a partnership in 2011 for the development, construction and operations of a 244-megawatt coal power plant in Calaca, Batangas under South Luzon Thermal Energy Corp.
“Phinma and Ayala have always enjoyed a strong partnership, making this agreement a truly welcome culmination of our joint initiatives in the energy sector, as we believe AC Energy is best- positioned to grow the business and take it to the next level. This strategic move likewise allows Phinma to focus on our rapidly expanding investments and operations in the education and construction materials sectors,” Phinma president and chief executive Ramon del Rosario Jr., said.
Phinma said it would use the estimated proceeds from the sale of P1.7 billion to focus investments on other sectors such as education and construction materials as opportunities arise.
Phinma said the transaction would result in a loss on sale of P357 million subject to adjustments but would allow it to avoid significant losses from the energy business in the future.
AC Energy president and chief executive Eric Francia said the transaction was an important step for AC Energy to achieve 5 gigawatts (5,000 MW) of renewable energy capacity by 2025.
“The Phinma Energy platform has significant operating and developmental renewable energy assets, and its large diesel capacity will complement the scaling-up of our renewable projects,” said Francia.
ING acted as exclusive financial advisor for Phinma in the transaction.