Monday, 30 June 2008

Skyway project builder gets P14-B funding; photo updates

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5 banks OK 10-year loan facility
By Doris Dumlao
Philippine Daily Inquirer

MANILA, Philippines--A syndicate of five banks agreed to provide a P14-billion loan facility to Citra Metro Manila Skyway Corp. to expand its elevated tollway from Bicutan to Alabang and refinance old debts.

The members of the loan consortium are Philippine National Bank, Allied Banking Corp., Land Bank of the Philippines, Union Bank of the Philippines and East West Bank, PNB president Omar Mier said last week.

"We're already at the documentation stage," Mier said.

The credit facility will have a 10-year maturity and is expected to be disbursed by July.

Mier said the syndicate was now only ironing out some technical concerns on documentation by one of the creditors.

PNB and Allied Bank, both owned by tobacco and beer magnate Lucio Tan and which are set to merge this third quarter, will provide about half of the fresh credit facility.

Mier said PNB would provide P5.1 billion while Allied Bank would lend P2.5 billion to Citra.

Roughly half of the proceeds from the P14-billion facility will be used as capital for the tollway expansion while the balance will be used to take out and replace older and more expensive debt.

Asked what made the creditors more confident in opening a large credit line for Citra, Mier said: "All it needed really was to restructure the cash flow. You have a waterfall of payments whereby senior lenders (will be paid off) first, then the preferred shareholders. And the cash flow is strong enough to service them all. Eventually, everyone will be paid off."

With the decline in interest rates over the years, the availment of a new loan to replace existing debts is expected to trim the toll road company's interest expenses and free up more money to boost its operations.

The Skyway project is a joint venture between the Citra Group of Indonesia and the state-controlled Philippine National Construction Corp. The first phase of the 35-kilometer elevated toll road, with a cost of more than $500 million, was built along the South Luzon Expressway.

The PNCC is the franchise holder of the North and South Luzon Expressways while the Citra Group is the biggest private sector toll road developer in Indonesia.

The Skyway project was done on a build-transfer-operate basis wherein Citra financed the design and construction of the toll road, after which it will transfer ownership of the toll road to the government. The government then allows Citra to recover its investment and generate some profits through the collection of tolls from motorists using the skyway.

About four years ago, creditor-banks rejected Citra's proposal to restructure debts for 15 years. While Citra could service its obligations to its creditors, the Skyway developer sought the restructuring to accelerate the payment of dividends to shareholders using the amount otherwise earmarked for principal debt repayments.

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