MAKATI CITY, Philippines – ACEN, the Ayala group’s listed energy platform, successfully signed an up to 15-year Senior Secured Term Loan Facility (Loan Facility) for up to Php 13.7 billion for its wholly-owned subsidiary, South Luzon Thermal Energy Corporation (SLTEC). This loan will allow SLTEC to decommission its remaining coal plants by 2040, which is 15 years ahead of the end of its technical life.
BPI Capital Corporation, the investment banking arm of the Bank of the Philippine Islands (BPI), is the Mandated Lead Arranger and Sole Bookrunner.
“BPI is committed to the sustainability of our clients’ businesses. We are delighted to support SLTEC by providing innovative financial solutions to enable their sustainable initiatives that are aligned with the Ayala group’s commitment to net-zero greenhouse gas emissions by 2050. This Energy Transition Financing (ETF) should help reset the path of the country’s energy generation mechanisms towards renewables and BPI is happy to be ACEN’s partner in this pioneering deal,” said BPI President and CEO Jose Teodoro K. Limcaoco.
Through the deal, ACEN intends to refinance an outstanding Php 9.8 billion Loan Facility, fund the partial redemption of capital in SLTEC held by the company, subject to regulatory approvals, and finance other transaction-related expenses. ACEN, in turn, shall use the proceeds of the equity redemption to reinvest in renewable energy projects. This transaction shall serve as a pioneer of Energy Transition Financing in the country.
The concept adopts the principles of the “Energy Transition Mechanism” (ETM) being piloted by the Asian Development Bank (ADB) in South and Southeast Asia. ETM aims to use public, private, and philanthropic financing to provide low-cost capital to coal-fired power plants to accelerate their retirement and help jumpstart reliable and affordable clean energy. ADB announced an ETM partnership involving the Philippines and Indonesia at COP26 in Glasgow last year. ETM is also consistent with the Department of Finance’s goal to retire coal-fired power plants and transition to clean energy.