SM Investments Corporation (SMIC) said on Friday that it will be acquiring the Philippine Geothermal Production Company (PGPC), which owns the Tiwi steam field in Albay and the MakBan steam field in Laguna and Batangas.
This comes as SMIC’s board of directors approved the acquisition of the Allfirst Equity Holdings, Inc.’s 81% stake in PGPC. With this move, SMIC – which previously owned 19% of PGPC – will now own 100% of the renewable energy (RE) firm, and thus, both steam fields.
Tiwi and MakBan, which began operations in 1979, produce a combined 300 megawatts of electricity. Tiwi, in particular, is Southeast Asia’s first commercial-scale geothermal steam field development. PGPC also owns other greenfield concession areas for geothermal steam production.
“As a leading sustainability advocate, SMIC is pleased to invest directly in clean renewable energy-related production, which is a national priority and aligned with our commitments to environmental stewardship and to tackling climate change. Renewable geothermal energy production contributes to carbon reduction efforts and is aligned to UN Sustainability Goals,” SMIC President and CEO Frederic DyBuncio said in a statement.
The transaction is structured as a share swap based on a Php26.6 billion enterprise valuation of PGPC, which results in the issuance of 17.4 million SMIC shares based on a 60-day volume-weighted average price of Php903.88 per share.
The valuation is based on the cash flow of the two geothermal steam fields.
“The terms of this transaction will additionally create value for our minority shareholders and ensure alignment of the interests of all shareholders in the geothermal property. PGPC is expected to generate significant carbon offsets reported under the Task Force on Climate-Related Financial Disclosures framework,” DyBuncio said.
SMIC’s shareholders are expected to approve the deal at the company’s annual stockholders meeting on April 27. The transaction, also subject to regulatory approvals, is expected to be completed in the third quarter.
