ACEN Corp. is set to divest by yearend its stake in a coal-fired power plant in Batangas after the facility’s owner partially redeemed its preferred shares held by the Ayala group’s energy arm for P3.2 billion.
In a disclosure on Monday, the listed company said its subsidiary South Luzon Thermal Energy Corp. (SLTEC) redeemed 32 million shares from ACEN, which in turn will receive funds that it can reinvest in renewable energy projects.
ACEN also said that the redemption of the remaining preferred shares of around 3.83 million in SLTEC “is expected to close by end 2022.” The partial redemption was done on Oct. 21, 2022.
SLTEC owns and operates a circulating fluidized bed thermal power plant in Calaca, Batangas with two units, each with a capacity of 135 megawatts (MW), which translates into a net output of 248 MW.
The move to redeem the shares comes about a year after ACEN’s board of directors on Oct. 18, 2021 authorized the company’s management to work towards the early retirement of the SLTEC coal plant by 2040, or 15 years ahead of the end of its technical life.
The plant’s retirement will be through the use of the energy transition mechanism (ETM), which ACEN described as an “innovative concept” developed by the Asian Development Bank.
It said ETM “aims to leverage low-cost and long-term funding geared towards early coal retirement and reinvestment of proceeds to enable renewable energy.”
It added that the equity divestment feature of the ETM includes the redemption of SLTEC preferred shares held by ACEN using proceeds of subscriptions from institutional investors.
“Proceeds received by ACEN will be deployed for its renewable energy investments,” the company said.
The redemption of the preferred shares will be paid in cash, it said.
ACEN also said that the funds will also help it fully commit to achieving net-zero greenhouse gas emissions by 2050 or earlier. It adds to the company’s recent capital-raising to fund renewable energy projects.
Last month, ACEN issued and listed its maiden peso-denominated ASEAN Green Bonds amounting to P10 billion, with a fixed interest rate of 6.0526% per annum for a five-year tenor, under its P30-billion debt securities program.
ACEN has around 4,000 MW of attributable capacity in the Philippines, Vietnam, Indonesia, India, and Australia. Of this capacity, renewables account for 87%.
The company aspires to be the largest listed renewables platform in Southeast Asia. Its goal is to reach 20 gigawatts of renewable energy capacity by 2030.
In 2021, ACEN announced its commitment to reach net-zero greenhouse gas emissions by 2050 by retiring its remaining coal plant by 2040 and transitioning its power generation portfolio to 100% renewable energy by 2025.
On Monday, shares in ACEN rose 1.5% to close at P6.09 apiece.