SMIC to acquire geothermal production firm

The Philippine Geothermal Production Company operates the Tiwi and Mak-Ban steam fields.

SM Investments Corporation (SMIC) is acquiring the Philippine Geothermal Production Company (PGPC) following its acquisition of the 81% stake in Allfirst Equity Holdings Inc, the holding company for the geothermal firm.

In a disclosure, SMIC said the transaction will bring the company’s ownership in PGCP to 100%.

The investment firm added that the transaction will be structured as a share swap based on a $518m (P26.6b) enterprise valuation of PGPC, which will result in the issuance of 17.4 million SMIC shares based of a 60-day volume weighted average price of $17.61 (P903.88) per share.

PGPC operates the Tiwi, the first commercial-scale geothermal steam field development in Southeast Asia, and the Mak-Ban steam fields, both of which have been operating since 1979 and are generating around 300 megawatts of electricity.

“As a leading sustainability advocate, SMIC is pleased to invest directly in clean renewable energy-related production, which is a national priority and aligned with our commitments to environmental stewardship and to tackling climate change. Renewable geothermal energy production contributes to carbon reduction efforts and is aligned to UN Sustainability Goals,” SMIC President and CEO Frederic DyBuncio said.

“The terms of this transaction will additionally create value for our minority shareholders and ensure alignment of the interests of all shareholders in the geothermal property. PGPC is expected to generate significant carbon offsets reported under the Task Force on Climate-Related Financial Disclosures (TCFD) framework,” he added.

PGPC has other greenfield concession areas for geothermal production, aside from the two steam fields, SMIC said.

The transaction would have to be approved by the SMIC shareholders at its annual stockholders meeting on 27 April and by regulators. It is expected to be concluded in the third quarter of 2022.

$1 = P51.34