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GPSC to learn soon of fate of appeal over blocked Glow deal

Nov 14. 2018
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THE board of the Energy Regulatory Commission (ERC) is expected to rule on November 21 on whether to accept an appeal lodged by Global Power Synergy (GPSC) against the regulator's decision in October to block the company’s plan to take over fellow power producer Glow Energy.

A source within the regulator said the ERC yesterday had a preliminary discussion on the submitted appeal. The regulator’s board also instructed officials to gather information for the board's consideration at its next meeting.

As the board meets every Wednesday, it is expected that the board will vote next Wednesday on whether to accept GPSC’s grounds for appeal.

However, the source said that if the board finds that GPSC has not presented any new information for its appeal, the board will not propose any consideration to proceed to a vote on the matter.

The ERC in October blocked plans by GPSC to buy 69.11 per cent of the shares in Glow. In a unanimous resolution, the regulator ruled that the proposed transaction could stifle competition in the energy business, violating provisions in the Energy Business Law of 2550. 

The GPSC board resolved on June 19 to approve the company’s plan to acquire directly and indirectly 69.11 per cent of the total issued shares of Glow from Engie Global Developments and make a tender offer for the rest of Glow’s securities. The company entered into a share-purchase agreement with the seller on June 20. The sale and purchase of shares were to proceed only after the fulfilment of conditions including the approval of the transaction by the ERC. 

According to a Fitch Ratings release yesterday, the ratings on GPSC remain on Rating Watch Negative (RWN) after the company said it submitted an appeal against the ERC’s order that blocked GPSC's acquisition of Glow.

Fitch said that GPSC's ratings will remain on RWN pending the outcome of the appeal. If GPSC ultimately proves unsuccessful in challenging the ERC's decision and the transaction does not go ahead, Fitch expects GPSC's ratings to be unchanged, given that the company’s financial and business profiles are broadly consistent with those prior to entering into the acquisition.

Should the appeal be successful, the ratings of GPSC would remain on RWN pending further progress on the acquisition. Fitch expects to review the RWN once the transaction is completed and there is a greater clarity on the long-term funding and post-transaction capital structure. 

Fitch initially placed GPSC's ratings on RWN on June 22, based on the expectation that GPSC's financial profile would deteriorate, as leverage could worsen to levels that are not in line with its “A+(tha)” ratings. The acquisition would be initially funded by bridging facilities, which would mature one year from the deal’s completion. 

If the company wins its appeal, it plans to complete various transactions, including the issuance of a debenture and an equity injection, which would affect its long-term capital structure.


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