First Gen’s ₱50-Billion Gas Asset Sale Could Boost Dividends While Reshaping Balance Sheet and Debt Profile

First Gen Corporation has completed the sale of a 60% stake in its natural gas business to Prime Infrastructure Capital Inc. for ₱50 billion, a landmark transaction that significantly strengthens the company’s financial position.

Under the deal, Prime Infra acquired controlling interests in the Santa Rita, San Lorenzo, San Gabriel, and Avion power plants, the proposed Santa Maria project, and the Batangas LNG Terminal. First Gen retains a 40% stake, ensuring continued participation in the gas platform while unlocking substantial liquidity.

Impact on Balance Sheet
The ₱50-billion inflow will boost First Gen’s cash reserves, making the parent company effectively debt-free after having prepaid its ₱20-billion loans earlier this year. The transaction also positions First Gen with a strong net cash position, enhancing flexibility for future investments in renewable energy projects.

Potential for Higher Shareholder Returns

With a debt-free parent and substantial cash inflows, First Gen is in a position to return more capital to shareholders. This could come in the form of higher dividends or even special payouts, subject to board approval and regulatory requirements. The transaction provides financial headroom for the company to balance reinvestment in renewables with rewarding its investors.

Debt Profile Transformation
Before the sale, First Gen’s consolidated long-term debt stood at $2.106 billion, largely concentrated in subsidiaries such as EDC and the gas plants. With the deconsolidation of 60% of gas-related loans (about $159 million) and LNG lease liabilities, consolidated leverage will drop significantly.

Debt-to-equity ratio, previously at 0.86x, is expected to improve markedly.
Interest-bearing debt obligations will decline, reducing financing costs and strengthening solvency metrics.

Strategic Outlook
First Gen will continue to report earnings from the gas business under the equity method, while redeploying capital toward geothermal, hydro, wind, and solar projects. “This partnership strengthens energy security and accelerates our transition to clean energy,” said First Gen Chairman and CEO Federico R. Lopez.

The deal underscores a strategic pivot: from heavy capital exposure in gas infrastructure to a more balanced portfolio focused on renewables, backed by a robust cash position and lower debt burden.

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