SM Investments Corp. (SMIC) is buying 81 percent stake from related parties in Allfirst Equity Holdings Inc (Allfirst), the company that holds the rights to develop the Tiwi and MakBan geothermal steam fields in Albay and in Laguna-Batangas areas.
SMIC over the weekend said it was acquiring the stake in exchange for its shares, “subject to valuation confirmation by an independent appraiser.”
“The transaction will be structured as a share-swap based on a P26.6-billion enterprise valuation of PGPC, resulting in the issuance of 17.4 million SMIC shares based on a 60-day VWAP of P903.88/share. The transaction will be accretive to SMIC based on 2021 earnings,” it said.
Allfirst is the holding company for Philippine Geothermal Production Co. Inc. (PGPC), which operates the Tiwi and Mak-Ban steam fields. Together they generate geothermal steam sufficient to produce approximately 300 MW of electricity.
Frederic DyBuncio, SMIC president, said the transaction will bring SMIC’s ownership in PGPC to 100 percent, and it will be included in SMIC’s portfolio investments in future reporting.
DyBuncio said the valuation for the transaction is based only on the cash flow of the existing geothermal steam fields and does not include any value to the other concession areas in the portfolio of PGPC which are currently in the developmental stage.
“All further upside from the production of these developmental concession areas are all for the benefit of SMIC shareholders,” he said.
SMIC shareholders will be approving the transaction when they meet on the company’s annual stockholders meeting on April 27, 2022 . It is expected to complete regulatory approval by the third quarter of of the year.
