As published on Business Mirror
PUBLICLY listed real-estate firm MRC Allied Inc. is venturing into the power business, targeting to increase its power-generating capacity to at least 1,000 megawatts (MW) in the next five years.
To achieve the target, the company, which is 51.9-percent owned by Menlo Capital Corp., is determined to put up at least 200 MW of capacity every year until 2020. In all, the cost to achieve the 1,000-MW target is estimated to reach anywhere from P80 billion to P100 billion, its newly appointed President and CEO Gladys Nalda said.
She said the company will rationalize its operation to focus on becoming an energy firm as it spins off two of its legacy assets in property development and several mining concessions.
Nalda said she will ask the company’s board of directors to approve the proposal and also list, by way of introduction, the two spun-off firms to the Philippine Stock Exchange, possibly by this year.
“We are currently pursuing a new thrust. We plan to develop at least 1,000 MW of clean and renewable energy [RE] by 2022,” said Nalda, former vice president for Legal and Corporate Affairs of state-owned PNOC Renewables Corp. and Legal Counsel of the Department of Energy.
Half of the planned 1,000 MW would be RE, while the other half would be a mix of various RE technologies and could include liquefied natural gas (LNG), Nalda said.
Not all power projects would be built from scratch, as MRC is open to acquiring or partnering with existing RE developers, particularly those power projects that failed to secure incentives from the government via the feed-in-tariff (FiT) scheme.
“There’s an opportunity for us to acquire existing RE plants, specifically those that are already connected to the grid that will provide us with immediate returns,” she said.
The company would raise funds to finance these capital-intensive power projects. “To achieve this goal, we will endeavor to raise funds either on our own or with strategic partners. We will aggressively explore all available options to raise capital and finance our RE projects,” Nalda said.
She refused to divulge identities of prospective investors.
For this year, MRC has an aggregate of 160-MW solar capacity in the pipeline. These are the 60-MW solar plant in Naga City, Cebu and the 100-MW solar-power project inside the Clark Green City in Tarlac. Both are still under the predevelopment stage.
Menlo Renewable Energy Corp. (MREN), a 100- percent subsidiary of MRC, will handle these solar projects.
MREN’s solar-power project in Cebu will cost P3 billion. For the solar project in Tarlac, MREN has partnered with the Bases Conversion and Development Authority and Sunray Power Inc. The project cost is estimated at P5 billion.
Project commissioning for the two solar-power projects is expected to happen two years from now. Once operational, Nalda said these two projects could initially contribute at least P619 million in revenue a year.
For this year, the company plans to issue preferred shares worth P1 billion for its funding requirements, in addition to an earlier plan to conduct private placement, also worth P1 billion.
The company plans to increase the par value of its common shares to a level more appropriate to the market and in order to encourage the participation of institutional investors.
“We only have to show we have good projects and the funding will come in,” Nalda said.
The company claims investors have responded positively to MRC’s new thrust of diversifying into clean energy, as seen in the biggest leap in the company’s stock price of more than 200 percent compared to other shares.
Along with the diversification, Nalda said the company would also improve the company’s corporate governance and its overall business structure.
“As we move forward and grow our business in the energy sector, we recognize we also have to strengthen our corporate governance, increase our transparency, improve our corporate structure and enhance our management team,” Nalda added.
The company will also increase the number of its board of directors to accommodate at least three independent director seats.
The overall goal, she said, is to enhance shareholder value and contribute to nation building, along with the expansion and diversification of the company.
“We will remain firm on our commitment to not only expand our business, but also to continue to advance our shareholder’s interests, promote employee welfare and contribute to nation-building,” she added.
MRC, which previously stood for Makilala Rubber Corp., has a 178 hectare of industrial estate in Naga City, Cebu and a 472 hectare of raw land in San Isidro, Leyte.
Located 35 kilometers away from the Mactan International Airport, the industrial estate in Naga City, known as the New Cebu Township One, is registered with the Philippine Economic Zone Authority as a special economic zone.
Nalda said it is one of the remaining chunks of land in Cebu province.
Meanwhile, it has total of 25,003 hectares of mining concessions in Surigao, Boston-Cateel in Davao Oriental, another one in Davao and Tampakan in South Cotabato.
Nalda said the valuation of property assets are expected to rise since the valuation was done in 2011, while its mining assets would easily fetch a valuation of about $1 billion.
The Sagittarius’s gold and copper mining area in Tampakan alone has been estimated to have a value of $37 billion, she said. The mine is just beside those of MRC’s.
Nalda added the company plans to issue preferred shares this year to raise some P1 billion and will accept private placements of a total of P1 billion to fund its RE projects worth P8 billion for this year alone.
“We will endeavor to raise funds either on our own or strategic partners. We will aggressively explore all available options to raise capital and finance our renewable-energy projects,” Nalda said.
The company was originally involved in the processing and export of baled natural rubber. In 1993 new stockholders acquired the company from Philtread Tire and Rubber Corp. and diversified the company into real property development, particularly into township development.