Nickel Asia Corporation (NAC), the Philippines’ largest producer of lateritic nickel ore, aims to secure a controlling stake of 66 per cent in the US energy firm Emerging Power Inc (EPI) for $20.6 million (P920 million).
NAC informed the stock exchange on Thursday that the company’s board had approved the conversion of its one-year P446 million loan to, equity in EPI corresponding to an initial ownership of 55 per cent. The board also approved an additional investment of P474 million, to be invested in stages, which will increase the NAC’s ultimate ownership in EPI to 66 per cent.
The initial 55 per cent acquisition is composed of 312,888,889 shares priced at P1.425426136 apiece.
The NAC board’s decision came after it was discovered that there was an increase in the resource, in the two completed slim wells of EPI’s Montelago geothermal project in Oriental Mindoro.
Based on the new Volumetric Assessment Report made by EPI’s project consultant Iceland Geosurvey, the increase in resource in the two completed wells range from 28 to 30 MW of power over a 25-year period.
The report added the resource can expand with further drilling.
NAC’s goal in acquiring EPI is to develop a new business segment that can give long term revenues to the company, even as it aims to address the lack of power in the country by focusing on renewable energy sources.
“The funds will be used for drilling of additional wells and related production facilities within the geothermal field. The 40 MW Montelago project is being undertaken under a special purpose corporate vehicle (SPV) and it is expected that overseas investment funds that specialize in renewable energy projects will invest directly in the SPV to complete the equity portion of the project,” NAC said in its statement.
EPI is a Filipino-owned company based in New Jersey that engages in the renewable energy business, including but not limited to power generation, power trading and power supply to retail customers and end-users as well as to distribution utilities and consumers directly connected to the voltage transmission network.
NAC’s last traded price went up by 0.94 per cent or P0.250 to close at P26.85.