Fort Pilar Energy, Inc. exercises right of assignment in favor of its subsidiary for the purchase of Malaya TPP

28 Jun 2021

The Power Sector Assets and Liabilities Management Corporation (PSALM) has approved the request of Fort Pilar Energy, Inc. (FPEI) to assign its right to purchase the 650-megawatt Malaya Thermal Power Plant (Malaya TPP) and its underlying land to its wholly owned subsidiary named Belgrove Power Corporation (Belgrove). FPEI is the winning bidder in the privatization process conducted by PSALM for Malaya TPP last month.

Pursuant to the terms of the privatization activity, the winning bidder may assign its right to purchase to its wholly-owned subsidiary. This right of assignment is set forth under Section 13.09 of the Asset Purchase Agreement (APA), a document duly approved and disseminated to all parties as part of the privatization activity.

“PSALM considered the request for assignment only after ascertaining the Assignee’s juridical existence and financial capability through a rigorous evaluation process and upon obtaining FPEI’s acceptance of the additional conditions that it will become solidarily liable with Belgrove for any and all obligations of Belgrove as buyer under the APA,” PSALM President and Chief Executive Officer, Irene Besido-Garcia, said.

The next step in the privatization process is the filing of all the required documents with the Philippine Competition Commission (PCC) for the issuance of a Certificate of Non-Coverage. This transaction is exempt from the rule requiring compulsory notification on mergers and acquisition, but PSALM will have to secure the said Certificate of Non-Coverage.

Within two (2) business days from the receipt of clearance from PCC, PSALM will proceed with the issuance of Certificate of Effectivity to Belgrove. Within 30 days from receipt of the Certificate of Effectivity, the Closing Date will be set during which the remittance of payment should be done.

On 07 May 2021, PSALM declared FPEI as the winning negotiating party for the asset after submitting the highest offer with PHP3.12 billion for the asset which is substantially above the minimum offer price set at PHP1.84 billion.

The Notice of Award was issued to FPEI on 02 June 2021 after it passed the post qualification process.

PSALM will use the proceeds of this privatization activity to pay for the remaining stranded contract costs and stranded debts. MTPP contributed to the losses of PSALM the past many years operating as a must run unit.

Strategic Communications and Partnership Division
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