SMIC receives approval to acquire Philippine Geothermal Production Company (PGPC)

Rhea-AI Summary

SM Investments Corporation (SMIC) has secured SEC approval to acquire an 81% stake in Allfirst Equity Holdings Inc for P15.76 billion, aiming to achieve 100% ownership in Philippine Geothermal Production Company (PGPC). The deal involves issuing 17.44 million new shares to sellers, equating to 1.4% of SMIC’s outstanding shares. PGPC generated $99.4 million in revenues and $48.8 million in net income in 2021, contributing significantly to SMIC's earnings. This acquisition aligns with SMIC's growth strategy and commitment to sustainability in the Philippines.

Positive

• Acquisition of PGPC will increase SMIC's ownership to 100%, enhancing operational control.
• The transaction is expected to be accretive, contributing 5.5% to SMIC's 2021 net income.
• PGPC operates established geothermal production facilities contributing to sustainable energy.
• SMIC's investment aligns with its strategic focus on high-growth sectors in the Philippines.

Negative

• None.

PASAY CITY, Philippines, Aug. 18, 2022 /PRNewswire/ -- SM Investments Corporation (SMIC) received approval from the Securities and Exchange Commission to acquire the 81% stake of related parties in Allfirst Equity Holdings Inc (Allfirst) in exchange for shares in SMIC. Allfirst is the holding company for Philippine Geothermal Production Company, Inc (PGPC). The transaction will bring SMIC's ownership in PGPC to 100%.

The total consideration paid for 81% of Allfirst is P15.76 billion. The transaction will involve the issuance of 17.44 million new shares to the sellers, equivalent to 1.4% of shares outstanding in SMIC.

"The acquisition of PGPC is sizeable, accretive to our shareholders, and a strong strategic fit with our portfolio of investments in high growth sectors in the Philippines. It further reinforces the SM Group's commitment to sustainability, good governance and acting as a catalyst for responsible development in the communities we serve," said Frederic C. DyBuncio, President and Chief Executive Officer of SMIC.

In 2021 PGPC delivered $99.4 million in revenues and $48.8 million in net income, equivalent to 1.2% of SMIC 2021 revenues and 5.5% accretion to SMIC 2021 net income respectively.

PGPC operates the Tiwi and Mak-Ban steam fields. Tiwi is the first commercial-scale geothermal steam field development in Southeast Asia, followed by Mak-Ban, both in operation since 1979. Together they generate geothermal steam sufficient to produce approximately 300 MW of electricity.

In addition to its two producing steam fields, PGPC also has several other greenfield concession areas for geothermal steam production which it will develop moving forward.

About SM Investments Corporation

SM Investments Corporation is a leading Philippine company that is invested in market-leading businesses in retail, banking, and property. It also invests in ventures that capture high growth opportunities in the emerging Philippine economy.

SM's retail operations are the country's largest and most diversified with its food, non-food, and specialty retail stores. SM's property arm, SM Prime Holdings, Inc., is the largest integrated property developer in the Philippines with interests in malls, residences, offices, hotels, and convention centers as well as tourism-related property developments.

SM's interests in banking are in BDO Unibank, Inc., the country's largest bank, and China Banking Corporation, the 6th largest bank. For more about SM, visit  www.sminvestments.com

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SOURCE SM Investments Corporation

FAQ

What is the significance of SMIC's acquisition of Allfirst Equity Holdings Inc?

The acquisition allows SMIC to gain full control of PGPC, enhancing its investment in sustainable energy.

How much did SMIC pay for the acquisition of Allfirst?

SMIC paid P15.76 billion for the 81% stake in Allfirst.

What was PGPC's financial performance in 2021?

In 2021, PGPC reported revenues of $99.4 million and net income of $48.8 million.

How will the acquisition impact SMIC's shareholders?

The transaction is expected to be accretive to shareholders, boosting SMIC's earnings.

What percentage of shares will SMIC issue for the acquisition?

SMIC will issue 17.44 million new shares, representing 1.4% of its outstanding shares.