Merkado Barkada
September 9, 2024 | 8:44am
Meralco [MER 405.00 ?0.3%; 34% avgVol] [link] negotiated a deal for UK-based Actis to take a 40% equity stake in the Terra Solar project for $600 million. The Terra Solar project is currently 100% owned by MER’s affiliate, SP New Energy [SPNEC 1.31 ?0.8%; 120% avgVol]. The parties to the deal expect the transaction to officially close in early 2025. While no specifics were provided on how the deal will function, based on quotes from MER’s leadership group, it appears as though Actis will receive primary shares in the SPNEC wholly-owned subsidiary that owns the Terra Solar project, with the $600 million going to that entity and not to SPNEC directly. News of this deal broke after-hours on Friday, so it’s likely that both MER and SPNEC will issue clarifications this morning to provide more details.
MB BOTTOM-LINE: MVP and MER appear to have solved the SPNEC problem in one shot. MVP has always said that he’s looking to sell a 40% stake in Terra Solar to a foreign investor, and while he hasn’t seemed to care whether that 40% goes all to just one investor or is split up between a small syndicate of investors, he’s never indicated a desire to part with more than 40% of the project. With Actis, SPNEC gets an experienced global investor in renewable energy with deep pockets to take the entire lot. As anyone who has accepted investment will tell you, it’s always easier to deal with just one large committed investor than an array of medium-sized investors with differing incentives, time horizons, and risk tolerances. SPNEC’s stock is up 30% over the past month, so let’s see how it reacts today.
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