Mirant will use $642 billion to pay down associated debt, netting it proceeds of $3.152 billion. The transaction is expected to close by the second quarter of 2007.
The assets on sale comprise 100% of the 735MW Pagbilao coal-fired power station, 100% of the 1,218MW Sual coal-fired power station and 20% of the 1,215MW Ilijan gas combined cycle power station. The total capacity of the assets which have changed hands is 2,203MW. Most of the electricity generated is sold to National Power Corporation, the government-owned utility company, by way of long-term electricity purchase and fuel supply contracts. The lucrative, long-term power purchase agreements Mirant enjoys are one of the reasons the assets are so attractive to a potential acquirer.
In 2005, the Philippines business had generated an adjusted Ebitda of $370 million. The price represents a multiple of 9.25 times adjusted 2005 Ebitda.
On July 11, as part of a strategic plan to enhance shareholder value, Mirant announced it was embarking on an auction process to sell its Philippines and Caribbean businesses. Mirant proposed to return cash realised to shareholders, while maximising the losses carried forward. At the time, the Philippines assets had attracted a great deal of interest and preliminary inquiries. However during the process, many parties had decided against bidding and ultimately it seemed there were only two serious contenders.
A few days ago the second bidder, Tanjong plc of Malaysia and OneEnergy (a partnership between Hong Kong's CLP Holdings and Mitsubishi Corporation), was reported to have withdrawn from the bidding which would have left only the Tokyo Electric Power Company-Marubeni consortium in the fray.
Mirant was advised on the sale by Credit Suisse. The buyers were advised - and financing arranged - by Sumitomo Mitsui Banking Corporation, Japan and ING Bank.
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