Listed firm Synergy Grid and Development Philippines Inc. (SGP) will be subscribing to P12.238 billion worth or equivalent 203,630,000 non-voting preferred shares of affiliate-firm National Grid Corporation of the Philippines (NGCP), the operator-company of the country’s power transmission network.
SGP said the preferred shares purchase will be valued at P60.10 per share, hence, the total transaction will hover at P12,238,163,0 to be paid in cash coming from the proceeds of the company’s follow-on offering.
SGP Chairman Henry Sy Jr. noted “this amount will be a huge boost to fund NGCP’s capital expenditure, a huge chunk of which is on new transmission projects for the improvement, upgrading, and expansion of the country’s power grid.”
NGCP unveiled last year its 13-year investment plan that will command aggregate capital expenditures (capex) of P440 billion; and that will cover 211 expansion and reinforcement projects for the country’s power grids.
SGP expounded that the shares subscription will result in increased capitalization for NGCP; and will also give SGP at least 9.241-percent direct shareholdings in the transmission company.
The listed company added it will be “entitled to the features of the non-voting preferred shares such as receipt of dividends, apart from the dividends that SGP already indirectly receives from NGCP through holdings companies.”
In the past two years, NGCP declared annual dividend of P12.0 billion for its common shares; and the release had been done on quarterly basis.
Robert Coyiuto Jr., vice chairman of SGP, similarly stated that “our investors who chose to partner with us at SGP are instrumental in ensuring that NGCP’s projects in the pipeline will come into fruition and play a significant part in the country’s economic development.”
NGCP is the sole operating asset of SGP, therefore, it is also serving as the main growth driver to the listed firm’s income generation.
SGP indirectly controls 60-percent of the outstanding capital stock of NGCP; and it has effective equity interest of 40.2-percent of the transmission firm’s common shares.
NGCP has a 25-year concession agreement with the Philippine government to operate the country’s power transmission assets – and that started on January 15, 2009 and will wind down in 2034.
One of the major projects being pursued to completion by NGCP is the Mindanao-Visayas Interconnection Project (MVIP) which will also concretize the country’s long-time dream of having a single and connected national grid.