SP New Energy Corp. (SPNEC) said Tuesday it acquired 100 percent of the shares of Prime Infrastructure Inc. in Terra Solar Philippines Inc. (TSPI) for P6 billion.
SPNEC said in a disclosure to the Philippine Stock Exchange it executed a deed of absolute sale to acquire the shares from Prime Infra. “Together with SPNEC’s shares in TSPI acquired from Solar Philippines, SPNEC is now the owner of 100 percent of TSPI,” it said.
TSPI was established in 2020 as a 50-50 joint venture between SPNEC parent Solar Philippines and Prime Infra to develop a 3.5-gigawatt solar and 4-gigawatt-hour battery storage project, seen as the world’s largest solar project.
SPNEC said the planned solar farm would be larger than India’s Bhadla Solar Park and China’s Golmud Solar Park, the world’s largest solar farms at over 2.2 GW. SPNEC said this would also exceed the capacity of all grid-connected solar projects operating in the Philippines combined at over 1.5 GW based on the Department of Energy’s latest figures.
SPNEC made the announcement to acquire 100 percent of Terra Solar after the PSE lifted the suspension on the trading of the shares of SPNEC on Dec. 1, 2023 after the firm reported that its public float was raised to 20.02 percent to meet the minimum public ownership requirement of 20 percent.
The public now owns 6.88 billion SPNEC shares with non-public shares amounting to 27.49 billion shares. Substantial shareholders are Leandro Leviste’s Solar Philippines Power Project Holdings Inc. (69.79 percent) and Metro Pacific Investments Corp. (4.65 percent).
SPNEC’s public ownership fell below 20 percent after the approval of its increase in authorized capital stock from 10 billion to 50 billion shares, to support the expansion of its project portfolio.
The PSE on June 2, 2023 ordered the suspension of the trading of the SPNEC shares after the “company’s public ownership level fell below 20-percent prescribed minimum percentage.”
Pursuant to the guidelines on minimum public ownership requirement for initial and backdoor listing dated Aug. 3, 2020, SPNEC was required to have at least 20-percent public float.
“In view of the abovementioned issuance, the company’s public ownership level fell below the 20-percent prescribed minimum percentage,” the PSE said.
Under the amended rule on minimum public ownership of the exchange, listed companies which become non-compliant with the prescribed minimum public ownership “shall be suspended from trading for a period of not more than six months and shall be automatically delisted if it remains non-compliant with the MPO after the lapse of the suspension period.”
“Given the foregoing and pursuant to the amended MPO Rule and the relevant guidelines, the trading of SPNEC shares will be suspended effective June 2, 2023. Further, should the company remain non-compliant with the minimum public ownership requirement after the lapse of the six-month period from June 2, 2023, SPNEC shall be automatically delisted from the Official Registry of the Exchange,” the PSE said, in its order.
“The exchange will inform the trading participants and the investing public of further developments on the matter,” it said.
The PSE was prompted by SPNEC’s June 2, 2023 filing pertaining to the approval by the Securities and Exchange Commission of, among others, the increase in its authorized capital stock from P1 billion divided into 10 billion common shares at par value of P0.10 per share to P5 billion Pesos divided into 50 billion common shares at par value of Php0.10 per share.
The company’s board of directors on Feb. 24, 2022, approved the acquisition of 100 percent of the outstanding shares of Solar Philippines Power Project Holdings Inc. in various entities (“Solar Philippines Assets”), through an asset-for-share swap, with SPPHI subscribing to 24,373,050,000 SPNEC shares at P2.50 per share in exchange for the Solar Philippines assets.
Subsequently, in separate disclosures made on May 8 and 16, 2023, SPNEC disclosed the board approval and the execution of the contract to sell, respectively, relative to the acquisition by SPNEC of 100 percent of the Solar Philippines assets. The acquisition will be paid in cash from the proceeds of SPPPHI’s subscription to SPNEC shares to be sourced from the increase in SPNEC’s capital stock, in lieu of a tax-free share swap.
Meanwhile, Manila Electric Co signed a 20-year power supply agreement with SPNEC’s Terra Solar Philippines for the supply of 850 megawatts (MW) of renewable energy to cover the power distributor’s mid-merit requirement starting 2026.
The PSA provides that a total of 600 MW of power supply will be available by Feb 26, 2026, while additional 250 MW will be delivered starting Feb 26, 2027 at a headline and levelized cost of electricity (LCOE) rate of P5.80 per kilowatt-hour, which was based on assumptions at the time when the competitive challenge for the unsolicited proposal was launched.
“The rate for this renewable energy supply offer is very competitive and lower than fossil-powered generation plants, especially at this time when fuel prices are skyrocketing. This PSA between Meralco and Terra Solar is very strategic as we ensure the availability of adequate and cost-competitive power for our more than 7.5 million customers in the coming years,” said Jose Ronald Valles, Meralco first vice president and head of regulatory management.
“In addition, this PSA forms part of our compliance to the Department of Energy’s Renewable Portfolio Standards policy and at the same time cements our commitment to source up to 1,500 MW of our power requirements from renewable energy,” he said.
The PSA, which was based on the terms of reference earlier approved by the DOE, will be filed with the Energy Regulatory Commission and will be subject to regulatory proceedings and approval prior to implementation.
The signing of the PSA serves as the culmination of the competitive challenge for Terra Solar’s unsolicited proposal.
Meralco’s third party bids and awards committee (TPBAC) earlier this year administered two rounds of competitive selection process (CSP) for the offer, both of which failed due to lack of challengers.
Since there were no outstanding disputes, the TPBAC advised Meralco that it may already enter into direct negotiation for the contract capacity requirement, pursuant to the revised CSP Rules.