9. Former name or former address, if changed since last report
Not Applicable
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class
Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common Stock
1,127,098,705
Debt Securities (Bonds in Billion PhP)
10.2
11. Indicate the item numbers reported herein
Item 9 (Other Events)
The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.
Manila Electric CompanyMER
PSE Disclosure Form 5-1 - Substantial Acquisitions References: SRC Rule 17 (SEC Form 17-C) and Section 4.4 and/or Section 5 of the Revised Disclosure Rules
Subject of the Disclosure
MERALCO PowerGen Corporation acquisition of 86% stake in Global Business Power Corporation
Background/Description of the Disclosure
MERALCO PowerGen Corp. (“MGEN”), a wholly-owned power generation subsidiary of Manila Electric Company (“Meralco”) entered into share purchase agreements with Beacon Powergen Holding Inc. (“BPHI”), a wholly owned subsidiary of Metro Pacific Investments Corporation (“MPIC”) and with JG Summit Holdings, Inc. (“JG Summit”) for the transfer of their respective shareholdings in Global Business Power Corporation (“GBP”) to MGEN for purchase price of PhP22,443,400,000.00 and PhP12,023,250,000.00 respectively. Said purchase price shall be paid in installments based on the following schedule: 60% shall be paid at closing, 20% will be paid 6 months after and the remaining 20% will be paid after 18 months.
BPHI holds a 56% ownership interest in GBP while JG Summit holds a 30% interest. MGEN currently owns the remaining 14%. As a result of the transaction, MGEN will own 100% of GBP.
GBP is the leading power producer outside Luzon with a gross capacity of 1,091 MW. The company has assets in the Visayas and Mindanao. The transfer is expected to deliver scale and operational synergy to both GBP and MGEN and futher enable these companies to provide ample and reliable supply of power to distribution utilities, electric cooperatives and other customers at competitive rates.
MPIC has an effective 45.46% ownership in Meralco while JG Summit has a 29.56% stake. The transaction is subject to customary closing conditions, including regulatory and third party approvals and is expected to close within the first quarter of 2021, barring any unforeseen circumstances.
AlphaPrimus Advisors acted as financial advisor to Meralco/MGEN with Picazo Law as its legal advisor.
For more information on GBP, please refer to attached audited financial statements.
Date of Approval by Board of Directors
Dec 21, 2020
Date of Approval by Stockholders
N/A
Other Relevant Regulatory Agency, if applicable
N/A
Date of Approval by Relevant Regulatory Agency
N/A
Rationale for the transaction including the benefits which are expected to be accrued to the Issuer as a result of the transaction
GBP is the leading power producer outside Luzon with a gross capacity of 1,091 MW. The company has assets in the Visayas and Mindanao. The transfer is expected to deliver scale and operational synergy to both GBP and MGEN and will further enable these companies to provide ample and reliable supply of power to distribution utilities, electric cooperatives and other customers at competitive rates.
Description of the transaction including the timetable for implementation and related regulatory requirements, if any
Share purchase agreements between MERALCO PowerGen Corp. (“MGEN”), a wholly-owned power generation subsidiary of Manila Electric Company (“Meralco”) and Beacon Powergen Holding Inc. (“BPHI”), a wholly owned subsidiary of Metro Pacific Investments Corporation (“MPIC”) and with JG Summit Holdings, Inc. (“JG Summit”) for the transfer of their respective shareholdings in Global Business Power Corporation (“GBP”) to MGEN for purchase price of PhP22,443,400,000.00 and PhP12,023,250,000.00 respectively. Said purchase price shall be paid in installments based on the following schedule: 60% shall be paid at closing, 20% will be paid 6 months after and the remaining 20% will be paid after 18 months.
Identities of the parties to the transaction
Name
Nature of Business
Nature of any material relationship with the Issuer, their directors/officers or any of their affiliates
MERALCO Powergen Corporation
Power Generation
Subsidiary of MERALCO
Beacon Powergen Holdings, Inc.
Holding Company
BPHI, a subsidiary of Metro Pacific Investments Corporation
JG Summit Holdings, Inc.
Holding Company
Significant shareholder of MERALCO
Terms and conditions of the transaction
The nature and amount of consideration (e.g. price per share, the aggregate amount)
1,077,451,739 shares from BPHI and 577,206,290 from JG Summit Holdings at PhP20.83 per share. PhP22,443,400,000.00 for BPHI and PhP12,023,250,000.00 for JG Summit
Purchase price will be paid in installments: 1. 60% of the purchase price will be paid on closing date; 2. 20% of the purchase price will be paid on the date falling 6 months after closing date; and 3. 20% of the purchase price will be paid on the date falling 18 months after closing date. Any unpaid installment payment will earn interest at the rate of 2.0% p.a. from closing date until payment.
Basis upon which the amount of consideration or value of the transaction was determined
The amount was the result of the negotiations between the sellers and the buyer. The valuation of GBPC takes into consideration, among others: • The existing business activities of GBPC and its subsidiaries, including long-term power supply agreements and retail electricity supply contracts, with the balance of the group’s capacity sold to the wholesale electricity spot market; • GBPC’s expansion plans, including the development of its robust pipeline of thermal and renewable energy projects; • Trading comparables; • An extensive due diligence review of GBPC and its subsidiaries businesses conducted by third-party consultants and advisors; and
MGEN also engaged the services of an independent third party to provide a fairness opinion on the terms of the transaction. Based on such independent review, the fairness opinion concluded that the price for the transaction is fair and reasonable from a financial standpoint.
The number of shares to be acquired
1,077,451,739 shares from BPHI and 577,206,290 JG Summit Holdings
Ratio/percentage to total outstanding capital stock
86
Terms of payment
Purchase price will be paid in installments:
1. 60% of the purchase price will be paid on closing date; 2. 20% of the purchase price will be paid on the date falling 6 months after closing date; and 3. 20% of the purchase price will be paid on the date falling 18 months after closing date.
Any unpaid installment payment will earn interest at the rate of 2.0% p.a. from closing date until payment.
Conditions precedent to closing of the transaction, if any
Closing of the transaction is conditional on the satisfaction and/or waiver, where applicable, of the following conditions:
• The approval on ruling in respect of the transaction from, or an acknowledgement that the transaction is not subject to mandatory merger review by the Philippine Competition Commission · Procurement of certain third party approvals including the following (i) approvals by lenders under certain loan agreements or arrangements entered into by GBP or its subsidiaries, (ii) waiver of transfer restrictions by counterparties and joint venture partners pursuant to a shareholders’ agreement of various subsidiaries of GBPC and (iii) approval as a major transaction by the shareholders of First Pacific Company Ltd., being a substantial investor of one of the sellers, by an ordinary resolution passed at the special general meeting
• The absence of any injunction, restraining order or similar action preventing the implementation of the transaction or any portion thereof having been issued by a court of competent jurisdiction. • The absence of any material adverse change. • Other customary conditions such as (i) all necessary corporate approvals and shareholders’ approval(s) having been obtained, (ii) the representations and warranties given by each of MGEN, BPHI and JG under the respective SPAs being true and correct in all material respects, and (iii) no material breach of the obligations, covenants and undertakings of each of MGEN, BPHI and JG under the respective SPAs. • Simultaneous occurrence of the completion of MGEN’s acquisition of BPHI’s 56% equity interest in GBPC, and MGEN’s acquisition of JG’s 30% equity interest in GBPC.
Description of the company subject of the transaction
Nature and business
GBP is the leading power producer outside Luzon with a gross capacity of 1,091 MW. The company has assets in the Visayas and Mindanao.
Refer to attached consolidated and parent financial statement for more information.
Discussion of major projects and investments
Please refer to Note 1, page 5 of the Consolidated FS of GBP for the summary of major projects and investments.
List of subsidiaries and affiliates, with percentage holdings
Name
% Ownership
Refer to attached note 6 of the attached parent FS of GBP.
Refer to attached note 6 of the attached parent FS of GBP.
Effect(s)/impact on the business, financial condition and operations of the Issuer
The acquisition adds 680 MW net equity capacity, substantial portion of which is contracted. Actual consolidated net income of GBPC in 2019 was P2.6 billion.
Other Relevant Information
The date of approval last December 21, 2020 refers to the MGen Board.
Filed on behalf by:
Name
Jocelyn Villar-Altamira
Designation
Assistant Vice President and Head, Corporate Governance and Compliance