Power retailer Manila Electric Co. (Meralco) said Thursday it is investing P15.9 billion to take a majority stake in SP New Energy Corp. (SPNEC) which is developing the country’s largest solar power plant in Central Luzon.
Meralco’s MGen Renewable Energy Inc. (MGreen) signed an agreement with SPNEC and parent firm Solar Philippines Power Project Holdings Inc. (SPH) to subscribe to 15.7 billion common shares and 19.4 billion redeemable preferred voting shares in SPNEC.
The transaction will result in Meralco owning 31.4 percent of SPNEC’s common shares based on SPNEC’s 34.37 billion existing common shares and having a 50.5-percent voting interest, including the redeemable preferred shares.
MGreen, a unit of Meralco PowerGen Corp. and SPH agreed to use SPNEC as the primary vehicle to develop 3,500 megawatts of solar panels and 4,000 megawatt-hours of battery energy storage systems in Luzon.
“This will be one of the largest solar projects not just in Asia, but in the world,” said Meralco chairman and chief executive Manuel Pangilinan.
SPNEC said it would file an application for an increase in authorized capital stock to enable the fresh injection of capital by MGreen and fund the construction and expansion of its solar projects. Its board approved the increase in authorized capital stock to 75 billion common shares and 25 billion preferred shares from 50 billion common shares.
It said it would also conduct a share sale to comply with the minimum public ownership rule of the local bourse. SPNEC said its board approved the conduct of a follow-on offering.
Trading of SPNEC shares has been suspended since June 3, 2023 after its public float fell below 10 percent. SPNEC has until December 2023 to increase its public float or it would be delisted from the Philippine Stock Exchange.
SPNEC is an integrated developer, owner and operator of solar power projects and is listed in the Philippine Stock Exchange.
“The Department of Energy’s vision is to have about 35 percent of the country’s energy come from renewable energy, and this is one of Meralco’s major contributions to this goal. We are humbled and grateful for this opportunity to build this renewable energy platform with Meralco. We look forward to bring together Meralco’s capabilities and our solar developments for the benefit of all stakeholders,” said SPNEC chief executive Leandro Leviste.
The completion of the transaction is subject to the satisfaction of certain conditions, including the relevant regulatory approvals, it said.
UBS acted as financial advisor in the transaction, while SyCip Salazar Hernandez and Gatm\aitan and Gulapa Law acted as legal advisors to both Meralco and MGreen. King & Spalding and Picazo Law are legal advisors to SPH and SPNEC.