Fort Pilar Energy Inc. (FPEI), which was previously declared winning bidder in the negotiated deal for the 650-megawatt Malaya thermal power facility, will be assigning its asset acquisition rights to subsidiary Belgrove Power Corporation.
In a statement to the media, asset-seller Power Sector Assets and Liabilities Management Corporation (PSALM) noted that Fort Pilar Energy opted to exercise its ‘right of assignment’ on the asset purchase to its subsidiary company.
In the ‘negotiated divestment deal’ for the Malaya plant last May, Fort Pilar emerged as the ‘winning buyer’ of the asset – with a price tender of P3.12 billion, which had been way higher than the minimum offer price of P1.84 billion prescribed for the facility.
According to the state-owned firm, the notice of award was issued to Fort Pilar Energy on June 2 this year, “after it (winning bidder) passed the post-qualification process.”
PSALM reiterated it will utilize the proceeds of that power plant divestment “to pay for the remaining stranded contract costs and stranded debts,” – being the financial obligations transferred onto its charge following the privatization of the National Power Corporation (NPC) assets.
The state-run firm justified that under the terms of the facility’s privatization, “the winning bidder may assign its right to purchase to its wholly owned subsidiary,” – and that is now the recourse being taken by Fort Pilar Energy.
The power firm expounded “this right of assignment is set forth under Section 13.09 of the Asset Purchase Agreement (APA),” and that was a document duly approved and disseminated to all parties as part of the privatization activity.
PSALM President and Chief Executive Officer Irene Besido-Garcia primarily indicated that “we considered the request for assignment only after ascertaining the assignee’s juridical existence and financial capability through a rigorous evaluation process.”
She qualified that PSALM also secured Fort Pilar Energy’s “acceptance of the additional conditions that it will become solidarily liable with Belgrove for any and all obligations of Belgrove as buyer under the APA.”
After complying with all requirements and preconditions to that right of assignment, PSALM emphasized that “the next step in the privatization process is the filing of all required documents with the Philippine Competition Commission (PCC) for the issuance of a certificate of non-coverage.”
Under that process, the government run firm stated that the transaction will be “exempt from the rule requiring compulsory notification on mergers and acquisition.” It will be PSALM that shall be securing that ‘certificate of non-coverage’ from the PCC.
“Within two (2) business days from the receipt of the clearance from PCC, PSALM will proceed with the issuance of certificate of effectivity to Belgrove,” PSALM specified; subsequently noting that “within 30 days from receipt of the certificate of effectivity, the closing date will be set during which the remittance of payment should be done.”
The government-owned firm said the sale of the Malaya asset had been the best recourse it had pursued, because that facility “contributed to the losses of PSALM the past many years operating as a must-run unit.”