Energy Development to settle obligation worth ¥22B

Energy Development Corp., the renewable energy arm of First Gen Corp., will settle its Miyazawa II debt worth ¥22 billion this Monday, the company said in a statement Sunday. With its Miyazawa II exposure out of the way starting June 28, Energy Development said it would move closer to its goal of overhauling the currency mix of its loan portfolio. Its yen-dominated loans would now account for only 13 percent of total loans from 40 percent in 2009 and from 87 percent in 2008. "Our investors have singled out the predominance of Japanese yen-denominated debt as a major concern, because of our vulnerability to foreign exchange translation losses," Richard Tantoco, president and chief operating officer of Energy Development, said in the statement. "Since taking over in 2008, we have fully addressed this concern with the successful redenomination of our debt stock to one that is now predominantly peso, or 66 percent of total loans," Tantoco said. With this development, Tantoco said Energy Development's income statement would be more predictable and “no longer subjected to large swings in the amount of unrealized forex losses/ (gains) now that EDC has become less reliant on yen-denominated debt." The company had successfully hedged the dollar-yen exposure of its ¥22-billion maturity in the first half of the year, a move that EDC said benefited the company by about P181.1 million. The yen-denominated debt was part of the legacy loans carried over by the government-owned PNOC-Energy Development Corp. to the fully privatized Energy Development to fund the investment and working capital of PNOC-EDC shortly after the 1997 Asian financial crisis. To repay its maturing loans and to fund its general corporate requirements, Energy Development recently secured a three-year syndicated loan worth $175 million with the Australia and New Zealand Banking Group Ltd. Manila branch, Credit Agricole Corporate and Investment Bank, and Standard Chartered as mandated lead arrangers and bookrunners. The company posted P3.80 billion in net income in the first quarter, up 68 percent from the P2.27 billion a year earlier. —Carmela G. Lapeña/VS, GMANews.TV