ATN Holdings, Inc. (ATN/ATNB)

ATN holdings, Inc. (ATN, the “Company”) sources of revenue are from real estate and health care. The Company has the following corporate structure:


PLDI and AHCDC are both engaged in the real estate industry while MCPI is in the health care industry. PLDI is the developer and major owner of the 48 storey Summit One Tower and its adjacent 6 storey parking building. AHCDC is engaged in developing residential properties around Ever Gotesco in Pasig City. MCPI has investments in outpatient clinics and claims that one hundred doctors manage the health care needs of the fifty thousand client patients.

The Company has investments in Transpacific Broadband Group International (TBGI) which has a market value of P37 million as of December 31,2012 and classified as “available for sale”.

TBGI was initially an investment agreement with Unipage Management Inc. (UMI) where the company invested P30 million for 30% interest and UMI invested P79 million for 40% interest in TBGI. In 2010, the agreement was terminated and UMI is selling TBGI shares in behalf of ATN. As of December 31, 2012, ATN has P65 million receivable from UMI.

ATN intends to pursue opportunities in renewable power generation by investing in a 30 MW solar photovoltaic power generation project under ATN Solar Energy Group, Inc. (ATN Solar) to be located in the 320 hectare property of PLDI in Montalban Rodriguez, Rizal. [1] ATN Solar 50% owned by ATN and 30% owned by TBGI already has a service contract for the Solar Power project as of December 2012. [2] As of March 31, 2012, ATN Solar is not yet in commercial operations and certain conditions are yet to be finalized including supply of material, project financing, and government permits.





The Good

Strong balance sheet

As of December 31, 2012, ATN has P414 million long-term debts of which P16 million are non-refundable deposits from clients and P376 million from deferred tax liabilities or a total P392 million float or debts that has negligible risk that a third party will demand payment.

Bank Loans are foreign denominated

ATN has P30 million yen denominated and P2.8 million dollar denominated bank loans. Due to the strengthening of peso, the Company recognized P6 million unrealized gain on these loans. In simpler terms, ATN can gain P6 million should they extinguish their foreign denominated debts.

It should be expected that this unrealized gain can still increase with the weakening of the Yen currency.

Trading at substantially below book

ATN has a book value of 3.05 as of December 2012.

Management has majority interest in the Company

ATN’s management is interesting. The CEO does not receive compensation for the last five years from the Company to signify his support and solidarity with the Company’s stockholders. The officers receive their compensation directly from the CEO.

The CEO also has high ownership in the Company which stands at 61% of the total outstanding shares as of June 30, 2012.

The Bad

Insiders that disagree with ATN management might sell more shares in the market

On December 28, 2011, the Company declared 2% stock dividend, increase in authorized capital stock from P200 million to P1.2 billion, and 1:6 share rights offering. [3] On May 3, 2012, Blue Stock Holdings Development, Inc. (Blue), a shareholder of 15% filed a complaint against the Company regarding the increase in authorized capital stock. [4]

On February 14 and March 4, 2013, Blue disclosed the sale of 6.383 million and 7.578 million ATN and ATNB shares respectively.

Unprofitable Health care business

The Company’s health care business does not contribute to ATN’s profit:


The Company should be better off without their health care business. As of March 31, 2013, the Company appears to reduce their health care operations. The surge in net loss may probably be caused by settlement of employee obligations.



The Company venturing into the capital intensive solar energy power is not a smart move, in my opinion, considering that ATN generates poor cash flows. However, with approved feed-in tariff of P17.95 per kWh for solar power, the Company may be able to obtain the needed financing. I would appreciate though if the Company would find other ways to utilize its valuable 320 ha property.

I would like to see the Company refinance its debts and settle the Yen and Dollar denominated loans in its books to take advantage of the strong peso which the Company appears to be doing.


In my opinion, ATN and ATNB is a company worth valuing half its book value or at P1.50.


  1. ATN Philippines Solar Energy to invest P5.68 B in 30-MW power project,
  2. Awarded Solar Projects as of December 2012,
  3. Results of Board of Directors’ meeting: stock dividend declaration, stock rights offering, appointment of officer,
  4. Complaint filed with SEC re: Blue Stock Holdings Development, Inc. vs. ATN Holdings, Inc. et. Al for nullification, revocation and cancellation of increase in capital stock,

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.


Basic Energy Corporation (PSE: BSC)

Basic Energy Corporation (BSC) was originally incorporated as Basic Enterprises, Inc. on September 19, 1968 and became an oil and gas exploration and development company on April 26, 1971, assuming a new name, Basic Petroleum and Minerals, Inc. Over the years, BSC evolved from an operating company to a holding company under the corporate name, Basic Consolidated, Inc. In 2007, in line with the inclusion among its primary purposes the production of ethanol and other biofuels, and the development of other alternative and renewable energy sources, the Company changed its corporate name from Basic Petroleum Corporation to Basic Energy Corporation.

The Company has investments in biofuel production, oil and gas exploration, and geothermal energy.

Biofuel production

The Company bought Zambo Norte Bioenergy Corporation (ZNBC) in July 10, 2007 and changed its corporate name to Basic Biofuels Corp. (BBC).  BBC plans for an integrated ethanol production plant in Gutalac, Zamboanga del Norte. The Company later established Basic Ecomarket Farms, Inc. (BEF) to undertake cassava project as feedstock for the ethanol plant. This is the Company’s response to the Biofuels Act of 2006 and to the optimistic view on biofuels during the time.

In the September 2011 quarterly report of the Company, they suspended the operations of BEF because the cassava yields were not enough to justify a commercial operation. Since the ethanol plant depends on the development of the feedstock operations, no further investments were made to BBC.

Oil and gas exploration

The company has interests in the following service contracts:

SC 47 (Offshore Mindoro) 1% interest

SC 53 (Onshore Mindoro) 3% interest

SC 41 (Sulu sea) .4413% effective interest

On April 3, 2006, the Company entered into a sale and purchase agreement (SPA) with Forum Energy (FEP), a subsidiary of Philex petroleum (PX). In June 5, 2008 the Company declared FEP default. On May 11, 2011, FEP & BSC signed a settlement agreement where FEP will pay $650,000 cash, convey 50% interest of FEP’s participating interests in Galoc, Nido, Matinloc and North Matinloc and 50% share in the historical cost recoveries of the oil assets.[1]

On June 21, 2012, BSC signed a Compromise Agreement (Agreement) with FEP where FEP is to do the following: [2]

  1. Pay $ 2,399,392.73 for the remaining balance of $10 million
  2. Settle $1 million within six months from date of execution of Agreement
  3. Settle another $1 million within 18 months from date of execution of Agreement

Geothermal Energy Operations

On July 10,2008, geothermal energy service contract for exploration and development covering 3,481 ha in the Calumpa Peninsula in Mabini Batangas was awarded by the DOE to the Company. The Company had then committed to invest $3.15 million for initial exploration activities.

The 5-year contract has phase 1 (yr. 1 & 2) and phase 2 (yr. 3) to determine the drilling locations. Based on the company’s initial assessment, the site has a potential of 20 MW. According to the company, the site can be developed within 2 years and has the advantage of being adjacent to transmission lines and strong electricity demand in the area. As of March 24, 2011, the company commissioned Filtech Energy Drilling Corporation for the prefeasibility study. [3]

On September 21, 2011, the Company signed a memorandum of understanding with Altus Transactional Services for a joint development of business opportunities in renewable energy projects.

On September 23, 2011, the Company signed a head of agreement with Geoenergy Incorporated to jointly develop BSC’s Mabini Geothermal Energy project. After the heads of agreement, Geonergy shall have the right to acquire 70% participating interest in the farm-in agreement for funding 100% of the exploration cost up to the drilling of one exploration well. [4]

In October 11, 2011, BSC incorporated Basic Geothermal Energy Corporation.

In December 16, 2011, the company signed a Memorandum of Understanding (MOU) with Energy 2035 Ltd., an Australian company engaged in the development of renewable energy in Australia, with a primary purpose to jointly engage in business opportunities for the development of renewable energy both in the Philippines and outside of their respective territorial areas. [5]


The geothermal power plant project of the Company is the most promising to deliver substantial revenue, which I expect to be online come the last quarter of 2015. The Company had been prudent in spending stockholder’s money by signing a heads of agreement with Geoenergy, thus limiting the risk exposure of the Company albeit at the price of lesser return in the future. The geothermal project of the Company is a factor to watch for because the feasibility of the geothermal project appears to be not yet considered in BSC’s share price.


  1. Settlement Agreement with Forum Energy Plc. Re: settlement of disputes on issues arising from Service Contracts,
  2. Execution of Compromise Agreement with Forum Energy Plc re: share purchase agreement,
  3. Engagement of services of Filtech Energy Drilling Corporation re: Pre-Feasibility Study of Mabini Geothermal Energy Project,
  4. Signing of Heads of Agreement with Geoenergy Incorporated re: Mabini Geothermal energy Project,
  5. Execution of Memorandum of Understandin with Energy 2035 Ltd.,

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Roxas Holdings, Inc. (PSE: ROX)

Roxas Holdings, Inc. (ROX, the “Company”) has the following significant subsidiaries and associate:


The Company is engaged in sugar milling and sugar refining business through its wholly owned subsidiary, CADP, CACI and its associate HPCo. The Company claims that their premium refined sugar is preferred by big industrial users including food and beverage and pharmaceutical companies which some customers have been in business with the Company for more than 15 years and some since the inception of the Company.

CADPI, located in Batangas, provides the refined sugar requirements of traders and industrial customers in Luzon while CACI and HPCo are based in Negros Occidental where there is substantial sugar activity and near the port of export supplies the raw sugar requirement of traders who deal with local and export consumers. In 2010, the Company expanded the sugar milling capacity of CADPI from 11,000 tons cane day (TCD) to 18,000 TCD and CACI from 11,000 TCD to 13,000 TCD.

The Company in an attempt to diversify its revenues and in response to the Biofuels Act of 2006 began construction of a bioethanol plant through RBC in 2008 which was completed in June 2010 and began its commercial operation in October 2010. RBC produces ethanol from molasses and has a capacity of 100,000 liters per day. RBC is capable of producing potable and industrial alcohol but currently only sells industrial alcohol or bioethanol fuel to domestic markets through direct selling to oil companies.

Other subsidiaries of ROX are the following:



The market fears that the sugar industry will not be as profitable as before if sugar tariffs will be reduced from 38% to 5% in 2015. Below is the gradual reduction of tariff rates according to EO 892[1]:


The purpose of tariff rates is to make imported sugar much more expensive than the local sugar.


High tariff rate in the sugar industry served as a barrier for entry for cheap imported sugar and allows the prices of local sugar to tread higher than the world sugar prices. We can then expect that as this barrier for entry diminishes in 2015, local sugar prices will trace world prices.

ROX’s plan to prepare for 2015 is to expand its sugar milling operations and diversify its revenue source through the construction of a bioethanol plant. The Company secured P6.1 billion loan to finance the plan. This plan of the Company became the past Management’s greatest mistake. Supply of sugar cane was not considered in the expansion causing the sugar mills to operate at less than its full capacity. The cost of producing biofuel was also not considered in the construction of bioethanol making the bioethanol operations a drag to the profit of ROX.

For the fiscal year 2011-2012, ROX placed a new CEO, Mr. Renato C. Valencia. Immediately, the new Management mandated to reduce overhead expenses to at least 10% to 20%. Salary of all officers and directors were reduced from 32 million to only 22 million. RBC was made sure to be fully operational in order not to drag the Company’s profits.

In a press release, Mr. Valencia’s comments hints what ROX’s business strategy will be,[4] “On the other hand, sugar is a commodity, characterized by high volumes, low and volatile prices and thin margins. Thus, only sugar businesses with the volumes, low-cost operations, broad and competitive product portfolio, and innovative management will survive and flourish.” (Emphasis added)

As a result of Management’s actions, ROX displayed the highest gross margin in the last five years and also the best profit figure in ROX’s history:


ROX has also filed its application to operate a cogen power plant with a potential capacity of 25.52 MW for CADPI, 10 MW for CACI, 4 MW for RBC, and 6.5 MW for HPCo. ROX’s cogen power plant can take advantage of the feed-in tariff under the renewable energy act as biomass energy. Biomass energy has a minimum feed-in tariff of P6.63/kWh [6].

A capable CEO at the helm, increasing margin, impending shortage of bioethanol, and entry to energy production will allow ROX to realize its value of P5.60.

Other data:



  1. Executive order 892,
  2. World sugar prices,
  3. Local sugar prices,
  4. Press Release: “Roxas Holdings 8-mo. Income: P668M”,
  5. Awarded Biomass Projects as of December 2012,
  6. Resolution No. 10. Series of 2012, Resolution Approving Feed-In-Tariff Rates,

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Energy Development Corporation (PSE: EDC)

Energy Development Corporation (EDC, the Company) has a portfolio of renewable energy generating assets that rely on indigenous fuels. The Company has 305 MW of geothermal (Palinpinon and Tongonan) and 132 MW hydro (Pantabangan and Masiway) installed capacity that is operating commercially which generates 6,847.4 GWh electricity sales or P24 billion revenue for 2011. The Company still has 825 MW installed geothermal capacity not yet in commercial operations. In addition to high potential geothermal portfolio, EDC is developing an 86 MW wind farm in northern Luzon. Below is the location of EDC’s power generation projects:

EDC map

Below is EDC corporate structure:


EGC is a holding company for EDC’s geothermal operations. Below are EGC’s subsidiaries:


GCGI was incorporated on June 22, 2009 with primary activities on power generation, transmission, distribution, and other energy related businesses. GCGI currently operates 192.5 MW Palinpinon and 112.5 MW Tongonan 1 geothermal power plants in Negros Oriental and Leyte respectively.

FG Hydro operates the 120 MW Pantabangan and 12 MW Masiway Hydroelectric Power Plants locates in Pantabangan, Nueva Ecija Province, Central Luzon.

EDC Drillco provides drilling services to Lihir gold Limited in Papua New Guinea which contributed P710 million of revenues for the Company in 2011.



EDC revenue performance for 2012 had much improved due to new contract prices agreed mid 2011 and power supply agreements signed in December 2011. Revenues had increase by 21% year-on-year in September 2012 translating to an EPS of 0.38. I project EDC’s EPS to reach 0.49 by the end of 2012.

Based on EDC’s annual report in 2011, the Company expects to put in commercial operations their 130 MW Bacman geothermal power plant by 2012. This is expected to contribute P4.2 billion additional revenues for the year 2013. I project the Company’s EPS for 2013 to at 0.58.



Assuming a 13x PE ratio multiple, EDC’s value should be 6.37 [0.49 x 13] by the end of 2012 and 7.54 [0.59 x 13] by 2013.

Other data:



Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Live Case Study: GREEN

Greenergy Holdings, Inc. (GREEN, the Company) has wonderful business developments that are potentially capable of bringing substantial future cash flow for the Company. The recent approval of feed-in tariff rates by the Energy Regulatory Commission (ERC) lowers the riskiness of renewable energy businesses in the future. [1] Feed-in tariff rates are fixed rates payable to renewable energy producers for not less than 12 years. Also, renewable energy producers will have priority purchase and transmission which assures the sale of their produced electricity. [2]

GREEN’s disclosure on November 16, 2012 contains the following: [3]

  1. Investment in companies or acquisition of assets relating to the businesses of Mr. Antonio L. Tiu.
  2. Amendments of the Company’s Articles of Incorporation and By-Laws to effect the following changes:
    1. Change in corporate name
    2. Increase in authorized capital stock up to P10 billion
    3. Issuance of shares through private placement transaction.


GREEN is in need of capital for their renewable projects. The Company has a short-term investment commitment of P252 million for the biomass project with Cleantech. [4] GREEN managed to meet the 45-day deadline of the required capital infusion by issuing new 25.2 billion shares and had 25% of the increase in shares issued to investors as private placement. For those new in corporate law, an increase in shares is required to be 25% subscribed and at least 25% of the subscribed be fully paid.

As illustrated above, GREEN still has to raise P167 million (P252m – P85m) in order to comply with commitment with Cleantech.

Other than commitment with Cleantech, GREEN has another upcoming capital intensive projects that are not yet fully funded which are the hydropower projects, currently under a preliminary agreement with Hydroring Capital BV (HC) and subject to financial and technical feasibility. The joint venture agreement is scheduled to be signed until January 13, 2013. [5]

With GREEN’s business development, it could be expected that GREEN will raise capital through the market in the near future but not before increasing shareholder value.

It could then be expected that GREEN may do the following:

  1. Change in corporate name.
  2. Increase in authorized capital stock to P10 billion.
  3. Acquisition of companies owned by Mr. Antonio Tiu through issuance of shares.
  4. Declare as property dividend their 39% interest in Music Semiconductors Philippines, Inc. (MSPI).
  5. Declaration of follow-on offering.

Rationale of the expectations:

  1. The change in name will properly reflect GREEN’s new businesses.
  2. Increase in authorized capital stock will provide GREEN more shares for issuance.
  3. Issuance of GREEN shares to acquire businesses relating to Mr. Antonio L. Tiu will allow GREEN to obtain control without any cash outlay. The issuance of shares will potentially wipe out the deficit of GREEN which stands at 284 million as of September 2012 and increase the assets of GREEN making it more attractive for investors.
  4. Distribution of MSPI shares as property dividend will increase shareholder value.**
  5. The follow-on offering will enable GREEN to raise the much needed cash.

GREEN’s par value could reasonably be expected to be increased from its current P.01 since an authorized capital stock of P10 billion at P.01 par value will translate to 1 trillion shares. There are no regulatory limitations for the number of authorized shares for issuance but 1 trillion shares for issuance sounds awkward in my opinion.

** This expectation was supported in the recent definitive information statement of the company where GREEN includes in the agenda for December 11, 2012 stockholders meeting their intention to list MSPI. [6]Listing of MSPI will most likely be through “listing by way of introduction” which requires distributing the shares to the public through property dividend just as PX and MER did with PXP and ROCK respectively.


  1. ERC Approves Feed-in Tariff rates,
  2. RA 9513,
  3. Board approval of investment or acquisition of assets, amendments to Articles of Incorporation and By-Laws, issuance of shares through private placement; Lifting of trading suspension,
  4. Comprehensive Corporate Disclosure re: Investment Agreement with Cleantech; Trading halt,
  5. Preliminary agreement with Hydroring Capital BV re: development operation and management of multiple hydropower projects, infrastructures and/or facilities in the Philippines,
  6. Definitive Information Statement for Annual Stockholder’ Meeting on December 11, 2012, record date November 16, 2012,

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Greenergy Holdings, Inc. (PSE: GREEN)

Greenergy Holdings, Inc. (GREEN, the Company) has its interests in waste management and renewable energy. Currently, GREEN has the following business structure:

MSPI is engaged in development, sales, marketing and logistics of semiconductors products. On August 1, 2011, the SEC approved the increase in authorized capital stock of MSPI but GREEN waived its right to exercise pre-emptive rights in MSPI effectively decreasing their interest down to 39% from 100%.

TWMRSI is engaged in the business of building, operating and managing waste recovery facilities and waste management system within the Philippines. As of September 2012, the Company had already advanced P235 million to TWMRSI in the form of future stock subscription, in other words, it is a cash advance that can be converted to equity. The 235 million cash was used to construct waste recycling facilities (construction in progress). TWMRSI is not yet in commercial operations.

WINSUN was incorporated on June 22, 2012 to engage in renewable energy projects. WINSUN is not yet in commercial operations.

On November 6, 2012, Biomas Holdings, Inc. was incorporated pursuant to the Company’s investment agreement with Cleantech Projektgesellschaft MBH (Cleantech),an infrastructure fund managed by ThomasLloyd Global Asset Management.[1] Cleantech will infuse P425,537,300 cash for 20,776,856,000 shares of GREEN and will be issued the following warrants:[2]

  1. 10,489,500,000 shares at a strike price of P0.02 with 1 year expiry from the issuance.
  2. 10,489,500,000 shares at a strike price of P0.03 with 3 year expiry from the issuance.

The Company on its part shall separately raise fresh capital amounting to P252 million. On October 31, 2012, private placement investors subscribed to GREEN shares amounting to P252 million.

Other Significant Business Development

On August 31, 2011, Memorandum of Agreement (MOA) was executed with Tianjin Tianbo Investment and Development Corporation (TTIDC) for the development of 1,000 MW wind energy project with an estimated investment of at least $1.3 billion within a 10-year period. [3] On March 13, 2012, TTIDC assigned to its affiliate China Power (Tianjin) New Energy Development Co. Ltd. its rights and obligation under the MOA.

On September 14, 2012, GREEN entered into a preliminary agreement with Hydroring Capital BV (“HC”) for the development, operation and management of multiple hydropower projects using the Hydroring concept. The project is subject to financial and technical feasibility and due diligence and the execution of definitive statements. The signing of joint venture agreement is scheduled within 121 days from date of signing of the preliminary agreement or until January 13, 2013.

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Petroenergy Resources Corporation (PSE: PERC)

Petroenergy Resources Corporation (PERC, the “Company”) is engaged in oil and exploration development, geothermal energy, and wind power.

Oil and Exploration Development

The Company has the following interests:

The Company has minority interest in Gabon, West Africa oil fields namely, Ebouri, Etame, and Avouma. The oil fields produced 7.3 million barrels with a daily production averaged 22,100 barrels for 2011. Currently, 100% of the Company’s revenues are sourced from their interest in Gabon oil fields. There were no disclosures yet regarding the renewal of their Production Sharing Contract (PSC) in Gabon. The contract can be extended every 3 years and is already the sixth contract period with Gabonese government. Historically, the contract is extended 2 years before expiration.

Amount spent for the development activities in the Gabon oil field:

Philippine Oil Exploration Activities

 Among all the service contracts (SC) that PERC owns, SC 14C is at the advanced stage where drilling is planned to be by the end of 2012.

The most promising is their interest in SC 51. SC 51 has the following participants:

*On October 23, 2012, Frontier Oil Corporation (Frontier) entered into a Farm-in Option Agreement where Frontier can acquire 80% interest in the southern area of SC 51 through shouldering all the costs of drilling an exploratory well in the area.

SC 51 is divided into northern (on-shore) and southern areas (off-shore Cebu). The on-shore prospect, Duhat, is situated on the northern tip of Leyte.

Northern Leyte has been described by geologists as containing the most natural oil seeps in the Philippine archipelago. Duhat was drilled in 2011 but the well reached only 321 m, far from the programmed 1,000 m depth, when it had to be abandoned due to adverse pressures. Despite the shortfall, oil and gas indications were observed and a working seal and structure conductive of hydrocarbon entrapment were proven, indicating the presence of an active petroleum system. New seismic data is scheduled to be acquired in July or August of 2012 to locate a new well on the same prospect.

Geothermal Energy

The DOE awarded PERC the Maibarara geothermal service contract in February 2010. In May 2010, the company entered into a joint venture agreement through the Company’s wholly owned subsidiary, PetroGreen Energy Corp. (PGEC), with Transa-Asia Oil and Energy Development Corporation (TA) and state owned PNOC Renewables Corporation (PNOC-RC) to jointly develop and operate the 20 MW geothermal power project.

In August 2010, a joint venture company Maibarara Geothermal, Inc. (MGI) was incorporated with PGEC owning 65%, TA (25%), and PNOC-RC (10%). The Company expects MGI to be in commercial operations by the 2nd half of 2013.


Wind Power

The Company’s Nabas Wind Power Project shows promising results where data gathered indicated that it can sustain 40-50 MW wind farm development.

Other Data:

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.