By Revin Mikhael D. Ochave, Reporter
MANILA Electric Co. (Meralco) extended a one-year convertible loan worth P6.7 billion to Leviste-led Solar Philippines Power Project Holdings, Inc. (Solar Philippines), the power distributor said on Thursday.
Meralco issued this clarification after the Leviste-led company said in its Facebook page on Wednesday that the Pangilinan-led company was buying another P7.5 billion worth of SP New Energy Corp. (SPNEC) shares.
“We would like to clarify that MGen Renewable Energy, Inc. (MGreen), a wholly owned subsidiary of Meralco PowerGen Corp. (MGen), entered into an exchangeable note facility and security agreement with Solar Philippines,” Meralco said in a regulatory filing on Thursday.
“Under this agreement, MGreen extended a one-year loan of P6.7 billion exchangeable into 5.8 billion SPNEC shares at maturity. The company does not expect this transaction to have a material impact on its business and operations,” it added.
Solar Philippines said in a social media post on Wednesday that Meralco bought an additional 5.8 billion shares, or 11.6% of SPNEC, as part of increasing its stake in the listed solar power company.
It added that the total investment of MGen and its affiliates in SPNEC was P27.9 billion, equivalent to 25.3 billion shares following the transaction.
SPNEC said in a separate regulatory filing on Thursday that the loan’s maturity date would be Sept. 2, 2025.
It added that the loan’s interest rate is 12% per annum, with a security interest. The SPNEC shares will be paid from secondary shares.
The transaction involves an additional tranche of P800 million, subject to certain conditions.
Globalinks Securities and Stocks, Inc. Trader Mark V. Santarina said the increase in Meralco’s stake in SPNEC was expected given the “strong influence of the Pangilinan Group” in the solar energy company.
“With this expanded control, investor sentiment remains optimistic about SPNEC’s growth potential, particularly as the partnership aligns well with the group’s broader energy strategy,” Mr. Santarina said in a Viber message.
Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a separate Viber message that the move was a “deferred acquisition.”
“It looks like a deferred acquisition, as there is an option to repay the loan in SPNEC shares at maturity. MGreen probably entered into this transaction because they would like to own those shares eventually,” Mr. Colet said.
“That said, Mr. Leviste has raised P6.7 billion, and there is market speculation on what he plans to do with all that cash. Perhaps part of that will be used to complete his takeover of Roxas Holdings, Inc. (RHI),” he added.
In May, RHI, First Pacific Natural Resources Holdings B.V., First Agri Holdings Corp., and Leviste-led Countryside Investments Holdings Corp. signed a nonbinding term sheet covering a plan to invest P5 billion for an initial 71.6% stake in the RHI.
The RHI previously said that the term sheet was “indicative only and does not create any legally binding obligation on any of the parties.”
Seedbox Securities, Inc. Equity Trader Jayniel Carl S. Manuel said the transaction is a “strategic alignment” between Meralco and SPNEC.
“For SPNEC, this loan provides immediate financial flexibility to accelerate the development of its renewable energy projects without diluting its equity early on. It positions SPNEC to expand its solar capacity and further its leadership in the renewable sector, particularly as the Philippines transitions toward cleaner energy sources,” he said in a Viber message.
Mr. Manuel also said that the deal is aligned with Meralco’s strategy of diversifying into renewable energy.
“By securing an option to convert the loan into equity, Meralco’s energy subsidiary can potentially gain a significant ownership stake in SPNEC, positioning it as a stronger player in the renewables space,” he said.
“Moreover, this deal offers financial benefits to both parties. For SPNEC, the loan improves liquidity, reducing its reliance on the volatile capital markets. For MGen, the loan structure allows it to benefit from potential equity upside should SPNEC’s stock value increase, aligning both parties’ interests,” he added.
Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.
On Thursday, Meralco shares rose by 0.79% or P3.20 to P406 apiece while SPNEC stocks increased by 0.78% or one centavo to P1.30 per share.