Megawide-led consortium borrows P3.3B from ADB to fund Mactan airport


 0 0 Google +0 0

MEGAWIDE CONSTRUCTION Corp. and its partner India’s GMR Infrastructure Ltd. have borrowed $75 million (P3.3 billion) from Manila-based Asian Development Bank (ADB) to partly finance an airport public-private partnership (PPP) project that involves building a new terminal at the Mactan-Cebu International Airport and upgrading an old facility, the two companies said in separate regulatory filings yesterday.



Megawide, which is listed on the Philippine Stock Exchange (PSE), said its joint venture company GMR-Megawide Cebu Airport Corp. has amended its financing plan for the Mactan airport to include the ADB loan.

The joint venture -- where India’s GMR owns a 40% stake -- had earlier raised P20 billion ($450 million) through a syndicated loan from six local banks: BDO Unibank, Inc.; Bank of the Philippine Islands; Development Bank of the Philippines; Land Bank of the Philippines; Metropolitan Bank & Trust Company; and Philippine National Bank, a separate statement from the ADB read.

The fresh loan from the ADB would boost GMR-Megawide’s financing to roughly P23.3 billion, or approximately 70% of the P31.92-billion ($750-million) capital that the consortium needs to raise to bankroll the construction of a new airport terminal in Mactan and refurbish its existing facility. That P31.92 billion consists of a P14.4-billion premium that GMR-Megawide paid to the government on top of a P17.52-billion project cost.

“The financing will fund 70% of its total project cost of P33 billion (approximately $750 million). ADB will fund $75 million of this as a portion of its share in the funding. The loan is now being financed by a consortium of seven banks including ADB,” GMR Infrastructure said in its filing with the Bombay Stock Exchange on Jan. 27.

The move meant the Mactan airport project is largely funded by borrowing.

Megawide has cash assets of P751.7 million as of end-September last year, according to its latest financial statement. That’s 67% lower from December 2013’s P2.3 billion cash it held in its books, a decline Megawide had attributed to “deployment of cash for investment made… to GMR Megawide Cebu Airport Corp. (GMCAC).”

‘ORIGINAL PLAN’
In a mobile phone reply to BusinessWorld’s query, Manuel Louie B. Ferrer, the consortium’s president, said the financing plan was faithful to the terms of the proposal GMR-Megawide submitted when it bid for the airport contract.

“70% of the total project cost through borrowings, while the remaining is through equity. That’s the original plan,” Mr. Ferrer said in his text message.

“What was amended was the Omnibus Loan and Security Agreement with banks originally signed last Dec. 18. Just included ADB in that agreement,” he explained.

The Mactan airport contract is one of five PPP contracts that the Megawide group has so far bagged since the Aquino government began bidding out projects under such scheme.

The four other PPP contracts Megawide owns are as follows: the P2.5-billion Integrated Transport System (ITS)-Southwest Terminal project; the P16.28-billion first phase of PPP School Infrastructure Project (PSIP) and PSIP’s P3.86-billion second phase; and, the P5.69-billion Modernization of Philippine Orthopedic Center.

On Wednesday, shares of Megawide closed at P8.30, down P0.09 or 1.07%.

“The fact that we were able to get the support of a global institution like ADB, along with the Filipino lenders, reflects our commitment to meeting global standards,” Manuel Louie B. Ferrer, the consortium’s president, said in the regulatory filing.

ADB provides direct financial assistance to private sector projects.

Projects, however, must have clear development impacts or demonstration effects that go beyond the benefits captured in the financial rate of return, its Web site showed. -- Chrisee Jalyssa V. Dela Paz
---

Kaboom ani nga company, hasta ang economy.