SPNEC set mid-August deadline for Terra Solar offers

SP New Energy [SPNEC 1.03, up 3.0%; 90% avgVol] [link] clarified a news report that SPNEC was looking to “secure foreign investments for its P200-billion Terra Solar development as early as October this year.” The PSE asked SPNEC to clarify the information and timeline. SPNEC confirmed that it is “committed to finalize a deal with a Strategic Investor... in 2024”, but clarified that its deadline for receiving binding offers is “set in mid-August” and that SPNEC board approval of moving forward with a particular offer “will likely be in September.” SPNEC is led by Manny V. Pangilinan (MVP) and owned by Meralco [MER 390.00 unch; 47% avgVol]. The company is looking to sell up to 40% of its massive Terra Solar project to finance that project’s development after the company’s previous owner, Leandro Leviste, failed to maintain a partnership with Enrique Razon and failed to find an alternative funding source.

MB bottom-line: SPNEC needs to make this sale. This isn’t a “want”, where SPNEC is planning to offload secondary shares in the Terra Solar project to a foreign bagholder to raise money for SPNEC and MER; they need someone to dump a huge pile of money into the project in exchange for primary shares because SPNEC doesn’t have the financial resources to finance the development of the project on its own. This is not “new” news, but it’s going to be important to remember this as we move forward through the process. MVP has a long history of using the press to conveniently outline his BATNA (best alternative to a negotiated agreement) and play old-fashioned hardball. He also has a (more recent) history of appearing to sign deals only to snatch defeat from the jaws of victory.. Reports have said that SPNEC is looking to get between $300 million and $400 million (P17 billion to P24 billion) for the 40% stake they’re selling, and that one of the potentially interested buyers is Mitsui, a Japanese company with considerable ties to another MVP-led company, Metro Pacific Investments. The project is expected to cost P200 billion to implement in full by its 2026 energization target.

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