Corporate News & Analysis: Aboitiz Power (AP) Set to Acquire Two Coal Plants

Following yesterday’s news, Aboitiz Power (AP) is set to acquire 66.10% of GNPower Mariveles and 40% of GNPower Dinginin for USD1.2 bn from the Blackstone Group.  GNPower Mariveles owns the 604 MW coal-fired power plant in Mariveles, Bataan which has been in operations since February 2014.  The effect of this new plant on AP’s earnings were detailed in yesterday’s AP Corporate News & Analysis.  Meanwhile, GNPower Dinginin is developing a 668 MW coal-fired power plant in Bataan.  Its Unit 1 will be completed in March 2019 and Unit 2 in January 2020.  These are the biggest of six coal-fired power plants in Luzon listed as committed projects by the Department of Energy.  In a full year effect of the two units of GNPower Dinginin, AP’s net income is estimated to grow by 6% or PHP1.3 bn from equity in net earnings.  The acquisitions are in line with AP’s target of having a 4,000 MW power capacity by 2020.  AP will be borrowing from six banks USD650 mn (PHP31.85 bn) to partly finance the acquisition.  Interest-bearing debt to equity ratio is estimated to rise to almost 1x from 0.68x from the debt.  This is a necessary debt for a golden opportunity to increase power capacity and significantly boost earnings by 14% from both plants combined.

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