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HEI Power
to buy stake in
Philippine utility
The investment could total
By Russ Lynch
$93 million for the 46% share
of East Asia Power Resources
Star-Bulletin
A subsidiary of Hawaiian Electric Industries Inc. will invest at least $87 million to obtain a 46 percent share of an electric power company in the Philippines, continuing HEI's plan to make money from selling its expertise in Asia-Pacific countries.
HEI Power Group will buy into a publicly traded company, East Asia Power Resources Corp., which has power plants in Manila and Cebu generating a total of 390 megawatts.
The purchase is subject to some conditions that have to be met or waived before the deal closes.
If certain earnings targets are met, HEIPG will put in as much as an additional $6 million, for a total of $93 million.
The investment is part of a joint arrangement with El Paso Energy International aimed at gaining control of the power company in the Philippines.
Robert F. Clarke, HEI chairman, president and chief executive officer, said the acquisition will start generating income for HEI as soon as the transaction is completed.
He said the involvement with El Paso Energy strengthens HEI's position to participate when the government-owned National Power Corp. in the Philippines soon goes private.
HEIPG already has interests in the Philippines as well as elsewhere in the region. In 1998 and 1999 it built up a total of 20 percent ownership of Cagayan Electric Power & Light Co.
In China, HEIPG has a 75 percent interest in a joint venture formed to build and run a 200-megawatt, coal-fired power plant in Inner Mongolia.
In Guam, the company runs a 50-megawatt plant for the Guam Power Authority.
By the end of 1999, HEIPG had invested $49 million and with the new Philippines deal has made total commitments to spend an additional $179 million. The parent company said none of the money is coming from HEI's utility or banking subsidiaries.
HEI formed the overseas power development business in 1995. Not everything it has tried to do has worked out. In 1996, the subsidiary withdrew from a plan to join in the construction of a power plant in Cambodia. HEIPG executives put months into the effort but were unable to reach a joint agreement with the Massachusetts-based developer.
