January 26, 2023 | 9:04am
ACEN [ACEN 7.5 2.0%] [link], the Zobel Family’s renewable energy developer, disclosed that it had signed agreements with Solar Philippines Power Project Holdings (Solar PH) to receive 500 million shares of SP New Energy [SPNEC 1.4 3.8%] from Solar PH as a “pre-payment” for part of a loan that Solar PH received from ACEN.
The original P1.0 billion loan was signed between ACEN, Solar PH, and a Solar PH affiliate (Provincia Investments Corp) on June 25, 2021, with a repayment date of July 2, 2026.
The loan was secured by Solar PH’s pledge of SPNEC shares that were owned by Solar PH (SPNEC’s parent company).
This transfer of 500 million SPNEC shares to ACEN is intended to be pre-payment of part of the loan’s principal, but it also serves as payment of interest and “fees” that are associated with releasing the remaining SPNEC shares from Solar PH’s original pledge.
The shares are worth P685 million as of SPNEC’s closing price and represent roughly 5% of SPNEC’s outstanding shares.
The loan was entered into before SPNEC’s IPO, and back when SPNEC was still “Solar Philippines Nueva Ecija Corporation”, a plucky project-based solar power startup that was using the PSE’s new non-operational exception for renewable energy companies to list on the stock exchange.
That was before SPNEC decided to immediately pivot away from its limited project-based scope, announce a stock rights offering, buy a small Indonesian solar farm from its parent company, and then kick off a complete overhaul of its business plan to that of a public vehicle to acquire property and projects from its parent company, Solar PH.
All of that craziness has happened in the short year since SPNEC’s IPO hit the market, so it’s kind of remarkable to think that this transaction relates to something that happened in “The Before Times”. I’m not sure how to read this transaction.
The glass-half-full reading would be that ACEN is just pulling through on a commitment that it made long ago to become a shareholder in Solar PH and SPNEC (though, notably, without buying primary shares in SPNEC).
Glass-half-empty reading would be that, in a deal between a tiger (ACEN) and a mouse (SPNEC), the mouse is rarely going to get the better end of the bargain.
Was the plan all along to eventually IPO Solar PH, with the SPNEC IPO just being a cash-up exercise to take in some investor money and push that cash back up to Solar PH to improve Solar PH’s balance sheet? I have no idea.
But if there was any truth to my fever dream, then maybe a move like this one by Solar PH would help it slash debt without touching its cash balance, a move that would certainly look good to potential investors.
Again, I have no idea here, I’m just speculating. I don’t know anything about the situation, so I’d love to hear your takes on what you think could be going on!