EDC Increases Capital to Php30.15B; Declares 25% Stock Dividend

The Board of Directors of EDC approved management’s recommendation to increase the company’s capitalization to Php 30.15 billion from the present Php 15.075 billion.

The Board of Directors of EDC approved management’s recommendation to increase the company’s capitalization to Php 30.15 billion from the present Php 15.075 billion.

The increase in the company’s authorized capital for both common and preferred shares shall be as follows:

• Common shares from 15 billion shares to 30 billion shares at Php 1.0 par value, and
• Preferred shares from 7.5 billion shares to 15.0 billion shares at Php 0.01 par value.

The Board’s approval enables the increase in authorized capital to be already presented for shareholder approval during the Company’s Annual Shareholder Meeting this June.

“To fund EDC’s growth, we should not only rely on additional borrowings because debt capital markets can tighten and have tightened in the very recent past,” EDC President/CEO Paul Aquino points out. The Company’s existing borrowing capacity is estimated at US$600 to US$800 million. As a prudent measure that provides flexibility going forward, increasing EDC’s authorized capital stock opens up another avenue for fundraising.

The increase in authorized capital stock of the common shares shall be effected for by way of a 25 % stock dividend, to be taken from the Company’s unrestricted retained earnings as of December 31, 2008, and the subscription by the preferred shareholders to 25 % of the preferred shares out of the increase, in order to maintain the proportion of the stockholdings as of the stock dividend record date.

At the time of its becoming a 100 % privately-owned corporation, EDC’s existing authorized capital stock has been fully subscribed to. The proposed increase aims to provide EDC with fundraising options for its various organic growth projects, the acquisition of the NPC-owned geothermal power plants and the repayment of the JPY 22.0 billion maturing obligation in June 2010 (Miyazawa II bullet maturity).

For its organic growth projects, EDC intends to develop an estimated 280 – 300 MW of geothermal power projects. Included in its plans are the 20 MW Nasulo (2011), 50 MW Tanawon (2012), 50 MW Mindanao III (2013), 40 MW Rangas (2014), 40 MW Kayabon (2014), 40 MW Dauin (2014) and 60 MW (est.) So. Leyte (2019). The individual expansion projects are presently in varying stages of development.

EDC has always included its participation in the government’s auction for NPC-owned geothermal power plants as a platform for future growth. The Power Sector Assets and Liabilities Management Corporation (PSALM), in a publication last May 11, announced to all interested parties an invitation to tender for the 192.5 MW Palinpinon and the 112.5 MW Tongonan Geothermal Power Plants.