We write in reply to the correspondence of The Philippine Stock Exchange, Inc. (the “Exchange”) dated 28 October 2026 directing the Company to provide additional information on the planned share swap between MGENR/SPNEC and MGEN Renewables:
1. Description of proposed transaction, including the timetable for implementation and related regulatory requirements
The transaction consists of the transfer by MGEN Renewables of its shareholdings in Greenergy for Global Inc. (“GGI”), Greentech Solar Energy, Inc. (“GSEI”), CACI Power Corporation (“CPC”), Nuevo Solar Energy Corporation (“NSEC”), and PowerSource First Bulacan Solar Inc. (“PFBSI”) (the “MGEN Renewables Assets”) to the Company for newly issued MGENR/SPNEC shares. In consideration of the MGEN Renewables Assets, the Company will issue approximately 3.1125 billion shares to MGEN Renewables.
The proposed valuation of the MGEN Renewables Assets at PhP4.98 billion and the Company at PhP1.60 per share is within the valuation range determined by the independent valuation specialist engaged by the Company. In addition, the Company’s valuation of PhP1.60 per share represents a 30.08% premium to the closing price of PhP1.23 per share as of 23 October 2026.
The share swap agreement is targeted to be executed in November 2026. The Company will apply for confirmation of valuation and confirmation of exemption from the registration requirement under the Securities Regulation Code with the Securities and Exchange Commission also in November 2026. We expect to complete the confirmation process before the end of this year. Subject to the satisfaction of the agreed closing conditions, the transaction should be completed by the Second Quarter of 2027.
2. Rationale for the transaction, including the benefits which are expected to be accrued to the listed company as a result of the transaction
The transaction forms part of a broader strategy to consolidate the operating assets of MGEN Renewables into MGENR/SPNEC, further strengthening MGENR/SPNEC as Meralco PowerGen Corporation’s (“MGEN”) primary listed renewable energy platform.
The addition of operating renewable energy assets is expected to enhance MGENR/SPNEC's asset base and provide immediate cash flow contributions from the operating projects.
3. The aggregate value of the consideration, explaining how this is to be satisfied, including the terms of any arrangements for payment on a deferred basis
In exchange for approximately 3.1125 billion newly issued common shares of MGENR/SPNEC at PhP1.60 per share, MGEN Renewables will transfer its shares in five (5) operating assets valued at PhP4.98 billion to MGENR/SPNEC.
The transaction is expected to be implemented on a tax-free basis and is subject to compliance with applicable legal and regulatory requirements and satisfaction of the closing conditions customary for this type of a transaction.
4. The basis upon which the consideration or the issue value was determined
The Company valued the MGEN Renewables Assets and the MGENR shares using the discounted cash flow method. The resulting valuations for both the MGEN Renewables Assets and the Company fall within the valuation range determined by FTI Consulting Philippines, the independent valuation specialist engaged by the Company for the transaction.
5. Detailed work program of the application of proceeds, the corresponding timetable of disbursements, and status of each project included in the work program
The proceeds will be used for general corporate purposes and shall be allocated and disbursed in accordance with the Company’s budgetary process and policies. |
6. Identity and corporate background of the subscribers/parties to the transaction
MGEN Renewables is the parent company of MGENR/SPNEC. It is the renewable energy arm of MGEN, which is focused on investing in and developing energy projects that utilize clean and sustainable energy sources. MGEN Renewables plays a vital role in the attainment of MGEN’s goal of building a balanced power generation portfolio.
MGENR/SPNEC is a subsidiary of MGEN Renewables. It is engaged in power generation, specifically from renewable energy sources. It was listed on the Exchange on 17 December 2021.
7. Identities of controlling and substantial stockholders of the parties to the transaction, accompanied by a structural chart depicting the structure of the subscriber and the issuer and the interests of such stockholders, both before and after the implementation of the proposed transaction
MGEN Renewables is controlled by MGEN.
The current controlling/principal stockholders of MGENR/SPNEC are as follows: MGEN Renewables (majority), SPPPHI (more than 10% stockholder), and PCD Nominee Corporation (holder of scripless shares).
Please find attached the requested structural charts.
8. The interest which directors of the parties to the transaction have in the proposed transaction
None of the Directors have a personal interest in the share swap transaction.
9. Statement as to the steps to be taken, if any, to safeguard the interests of any independent shareholders
The details of the share swap transaction were presented to the Finance, Risk Management, and Related Party Transactions Committee of MGEN, which is the 100% owner of MGEN Renewables, and the Risk Oversight and Related Party Transactions Committee of MGENR/SPNEC. Further, MGENR/SPNEC and MGEN Renewables separately engaged independent valuation specialists. The Boards of Directors of MGEN Renewables and MGENR/SPNEC based their respective decisions on the separate and independent recommendations of the foregoing.
10. Changes in the issuer’s capital structure before and after the transaction
There will be no change in the authorized capital stock of the Company as the shares that it will issue will come from existing unissued authorized capital stock. However, upon issuance, its outstanding capital stock will change from 50,073,050,000 common shares to approximately 53,185,550,000 common shares.
11. Effect to the issuer’s public float
Using the figures reflected in the latest Public Ownership Report of the Company and taking into account the recent acquisition by a corporate officer of shares of the Company (already disclosed to the Exchange), the public float of the Company will drop from 24.80% to 23.35% after the share swap transaction.
12. Timetable of the issuer’s plan to conduct a capital-raising activity, including the “potential re-Initial Public Offering”
The details of the capital-raising activity are still being worked out.
13. Other relevant information
None. |
SP New Energy CorporationSPNEC