10 Jan 2007
The Power Sector Assets and Liabilities Management Corporation (PSALM) yesterday issued the Notice of Award to the consortium of Norway's SN Power and Aboitiz Power Corporation (SNAP) officially declaring the group as the winning bidder for the 360-megawatt (MW) Magat Hydroelectric Power Plant in Ramon, Isabela.
In simple rites held at the PSALM offices in Makati, the Notice of Award along with the Certificate of Effectivity for the Asset Purchase Agreement (APA) for the Magat facility was received by Aboitiz Power president Erramon Aboitiz and SNAP director Luis Miguel Aboitiz from PSALM President and Chief Executive Officer Nieves L. Osorio.
Recently approved by the PSALM Board, the APA containing the final transaction documents for the Magat sale will take effect on the "third business day from delivery by the seller (PSALM) of the Certificate of Effectivity or the receipt by the buyer (SNAP) of the certificate." The certificate was issued after the PSALM Board got the necessary government approvals.
The APA for the Magat facility requires SNAP to deliver at least 40% of the purchase price of $530 million 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.
The consortium is also required to post a performance bond equivalent to 2% of the purchase price. The performance bond will be reduced every year equivalent to 2% of the aggregate amount of the deferred payments.
SNAP likewise needs to post a deferred payment security deposit equivalent to at least the next deferred payment in the form of cash, currently dated manager's check or an irrevocable standby letter of credit acceptable to PSALM.
During the deferred payment period, PSALM will turn over to the consortium the Magat facility on the condition that it will operate, maintain and rehabilitate the complex in the ordinary and usual course of business.
With a bid of USD530 million, SNAP topped the USD420.9-million bid of First Generation Northern Energy Corporation during the public auction held on 14 December. Magat has the largest generating capacity among the operating hydroelectric power plants on the sale block.
The Magat power plant was the second facility successfully bid out by PSALM last year, duplicating the success of the 112-MW Pantabangan-Masiway Power Complex auctioned off in September. The power complex has been turned over to its new owner First Generation Hydro Power Corporation.
PSALM is currently completing all the conditions precedent stipulated in the APA, the primary requisite for closing the contract. Specifically, PSALM is getting the consents and proceedings from the major creditors of the National Power Corp. allowing the transfer of the purchased assets as specified in the APA.
PSALM will likewise deliver to SNAP the closing deliverables, including the Certificate of Closing and the Certificate of the Seller's Representations and Warranties.
Strategic Communications and Partnership Division |