SP New Energy Corporation (SPNEC) is planning a follow-on offering to raise additional capital as well as to increase its public float specially after this will be further reduced once MGen Renewable Energy Inc. (MGreen) comes in as its new controlling shareholder.

In a disclosure to the Philippine Stock Exchange (PSE), SPNEC said it is doubling its authorized capital stock from 50 billion common shares to 75 billion common shares and 25 billion preferred shares and increase the number of its directors from seven to nine.

The additional shares will be used for the entry of MGreen as well as the conduct of a follow-on offering “with an aim to support the expansion of the Company’s project portfolio and increase the public ownership of its shares.”

“In addition, and considering this, the Company is preparing to submit its plan to increase its public ownership to at least 20 percent, in compliance with the Minimum Public Ownership for companies listed in the Philippine Stock Exchange,” SPNEC said.

MGreen, the renewable energy development arm of Meralco Powergen Corporation (MGen) has agreed with SPNEC and Solar Philippines Power Project Holdings Inc. (SPH) to invest P15.9 billion to subscribe to 15.7 billion common shares and 19.4 billion redeemable preferred voting shares in SPNEC.

SPNEC said the 15.7 billion common shares would have a total subscription price of P15.7 billion and represent 31.35 percent of the issued and outstanding common shares of the Company (which, together with the Company’s existing 34.37 billion common shares, would total 50.07 billion common shares).

The 19.4 billion redeemable preferred voting shares would have a total subscription price of P194.04 million and will not have the ability to earn economic returns or dividends.

Upon closing, the 15.7 billion common shares and 19.4 billion redeemable preferred voting shares will make MGreen the controlling shareholder of SPNEC with a total voting interest of 50.5 percent.

The issuance of these shares would come from the increase in authorized capital stock and fund the construction and expansion of SPNEC’s solar projects, including a planned 3.5 GW of solar and 4 GWh of battery storage.

The trading of SPNEC shares is currently suspended at the PSE after the firm’s public float dropped below the 20 percent minimum requirement after SPH swapped its assets for more SPNEC shares.

The Securities and Exchange Commission’s approval of SPNEC’s capital increase came out earlier than expected, resulting in the effectivity of the issuance of new shares to Solar Philippines before sale of shares to other investors have been completed.

Earlier, SPNEC raised its authorized capital from 10 billion to 50 billion shares with a subscription of 24 million new shares through the transfer of SPH’s assets.

This caused the firms public float to fall below 20 percent from about 33 to 36 percent prior to the effectivity of the share-for-assets swap.

Prior to the entry of MGreen, SPNEC’s non-public shares amounted to 87 percent, along with Metro Pacific Investment Corporation’s recent subscription of 1.6 billion shares which is equivalent to about four percent.