First Gen executes call option on EDC stake

Posted at 04/21/10 8:51 PM

MANILA, Philippines - Listed First Gen Corp. on Wednesday said it has entered into call option agreements with several shareholders for its geothermal arm, the Energy Development Corp. (EDC).

In a disclosure to the Philippine Stock Exchange, First Gen said it executed call option agreements with Philplans First Inc., Rescom Developers Inc., Philhealthcare Inc. and Systems Technology Institute Inc.

A call option contract gives the holder the right to buy a certain quantity of an underlying security from the writer of the option, at a specified price up to a specified date.

First Gen said the agreements grant them call options over an aggregate 585,000,000 common shares of stock of EDC within a period of three year or up to April 2013.

Under the terms of the agreements, First Gen will be entitled to exercise its call option over the EDC shares at the exercise price of P5.67 for the first year, P6.19 for the second year, and P6.76 for the third year.

The 585,000,000 options shares represent approximately 3.12% of the total outstanding common stock of EDC.

In January, First Gen prepaid about P2.45 billion in short-term debts of Prime Terracota Holdings Corp.—one of its partners for its interest in EDC.

First Gen earlier said it paid off Prime Terracota’s short-term debts using proceeds from the recently concluded stock rights offering into Prime Terracota for the payment of the said loans.

Prime Terracota is the parent company of Red Vulcan Holdings Inc., the corporate vehicle for EDC.

On January 21First Gen undertook a stock rights offering that generated a total of P14.997 billion in proceeds.

First Gen recalled that in August last year it invested P5.296 billion in Prime Terracota.

In December last year, First Gen said the stock rights offer is their bid to raise additional liquidity to manage its debt position and for other general corporate purposes.

First Gen said the stock rights offering will be eligible to holders of common shares as of a yet-to-be-determined record date and with an offer size of up to P15 billion.

In October, First Gen said its plan to increase authorized capital stock to P7.250 billion from P3.750 billion in line with the stock rights offering of approximately P15 billion.

First Gen said the proposed increase in authorized capital stock comprises of 3.23 billion common shares with a par value of P1 per share and 1.5 billion voting preferred shares with a par value of P0.50 per share.

“The proposed increase in capital stock also takes into consideration the company’s need to maintain adequate authorized capital to allow for the issuance of additional shares related to adjustments in the conversion price of the company’s outstanding convertible bonds as a result of the rights offer and other corporate actions,” First Gen said.