PSALM, First Gen Hydro exchange closing documents to pave way for turnover of Pantabangan-Masiway

16 Nov 2006

The Power Sector Assets and Liabilities Management Corp. (PSALM) has submitted the closing documents for the privatization of the Pantabangan-Masiway Hydroelectric Power Plant Complex to winning bidder First Gen Hydro Power Corporation (FGHPC).

FGHPC has likewise delivered its Certificate of Closing and documentary deliverables and has posted a performance bond of USD2.58 million, which is equivalent to 2% of the purchase price.

The completion of the closing deliverables by both parties paves the way for the turnover of the Nueva Ecija-based power facility.

"The turnover of the Pantabangan-Masiway Hydroelectric Power Plant complex to FGHPC marks another milestone in the ongoing privatization efforts of the government to fast-track the restructuring and privatization of the country's electric power industry," said PSALM President Nieves L. Osorio.

The operational turnover of the 100-megawatt Pantabangan and 12-megawatt Masiway hydro power plants will be held on Friday, 17 November 2006 at the Pantabangan Plant located in Barangay Fatima, Pantabangan, Nueva Ecija.

Under the Asset Purchase Agreement (APA) executed between PSALM and FGHPC, PSALM as the "seller" is required to submit to FGHPC, the "buyer," the Certificate of Closing and Deliverables to complete the transaction.

PSALM has complied with all the conditions precedent stipulated in the APA, the primary requisite for closing the contract. Specifically, the consents and proceedings allowing the transfer of the purchased assets, as specified in the APA, from the National Power Corporation to PSALM and from PSALM to FGHPC have been secured and completed.

PSALM has likewise delivered to FGHPC its closing deliverables. These include the Certificate of Closing executed by Ms. Osorio, the Certificate of the Seller's Representations and Warranties as of the closing date, and a transmittal of deliverables acknowledged before a person authorized to administer oaths.

PSALM has also secured the consent of the major creditors of National Power for the sale and transfer of the Pantabangan-Masiway power plant complex to FGHPC. This is one of the conditions precedent to complete the transaction.

In their respective letters to PSALM, the Asian Development Bank, the World Bank and the Japan Bank for International Cooperation indicated their individual consents to the sale and transfer of the power facility, which was bid out last 08 September and won by FGHPC with an offer of USD129 million.

"Let us give credit to the National Power plant personnel whose diligence in operating and maintaining the Pantabangan-Masiway facility allowed the government to seek the optimum value of the power plant," Ms. Osorio said.

"We would also like to thank the National Irrigation Administration for its cooperation and support in forging the Operation and Maintenance Agreement for the non-power component to ensure the continued safe and reliable operation of the dam, reservoir and other structures," she added.

Ms. Osorio also thanked the Department of Environment and Natural Resources and the Protected Area Management Board (PAMB) for allowing PSALM to continue administering the Masiway land through a Memorandum of Agreement signed between PSALM and the PAMB for purposes of power generation.

By completing its conditions precedent, PSALM, under the terms of the APA, can now require FGHPC to deliver at least 40% of the purchase price as upfront payment payable on or before the closing date. The balance of 60% may be paid in 14 equal semi-annual payments with an interest of 12% per annum compounded semi-annually. FGHPC will also be required to post a deferred payment security deposit.

Strategic Communications and Partnership Division
Tel. No. (632) 9029067