National Grid Corp. of the Philippines is seeking an extension of the deadline for its initial public offering plan amid the threats made by state-run National Transmission Corp. against its concession.
NGCP said in a position paper delivered to the Senate by spokesman Cynthia Albanza the concession agreement was publicly threatened by TransCo. Albanza said conducting the IPO in this scenario would be disadvantageous to the government.
“It, thus, makes no sense and would be downright irresponsible for NGCP to proceed with the IPO and ask the public to invest in a business the basic concession of which has been publicly threatened by the government. NGCP cannot perpetrate a fraud against the investors,” the company said.
NGCP said it was not asking for an exemption to comply with the requirement to list its shares, but was only seeking an extension.
“But it wants to do so with the same honesty and transparency with which it has conducted its business. It asks that it to be allowed to do so only when it is safe for the investing public to put in their money, when there is no more threat to the concession, and when the ERC issues the definitive final determination to enable the public to invest intelligently and with confidence and thereby maximize the optimum share price and funds raised from the IPO,” NGCP said.
“As everything goes back to the government at the end of the concession period, it is to the government’s interest as well, much as it is to NGCP and the investing public’s interest, that the extension is granted and the IPO is undertaken only when it is safe to do so and when share values are optimal,” the company said.
NGCP said while it would still comply with the requirement of listing its shares, it was asking for a reasonable extension of the period as expressly allowed under Section 8 of its franchise (Republic Act No. 9511) on the ground that the market condition was not suitable for such listing.
NGCP has a pending petition with the Energy Regulatory Commission for extension of the listing of the shares.
It said current market condition was not suitable for the listing and public offering in the absence of the final determination of price control arrangements from the ERC for the 4th Regulatory Period (2016-2020).
NGCP said that the absence of the final determination was preventing the company from having definitive base case financial projections for an IPO.
NGCP said it also has pending disputes with TransCo and Power Sector Assets and Liabilities Management Corp. which are now in arbitration.
“Due to uncertainty in NGCP’s expected future earnings as well as the lack of an approved capital expenditure budget for the 4th Regulatory Period, NGCP at present cannot meet the basic components for an IPO listing and provide the optimum price for its shares. Investor confidence in NGCP’s maiden entry into the capital market has to be established by ensuring sound and reliable and definitive financial information to the investing public,” the company said.
NGCP said it had spent the massive capital investments required of it under the concession agreement and its franchise.
It said that since 2009, it had completed numerous projects nationwide amounting P151 billion. By the end of this year, NGCP will complete up to P188 billion worth of projects.