NDC plans to borrow funds to acquire controlling stake on MRT
Posted on November 26th, 2009
The National Development Co. (NDC) is planning to avail of a loan from private banks in order to raise at least $300 million by yearend. NDC will be buying a portion of the controlling of stake of Land Bank of the Philippines (LandBank) and the Development of the Philippines (DBP) in Metro Rail Transit Corp. (MRTC). DBP president Reynaldo David said that the acquisition will soon be finalized and that they’re “almost there.”
The NDC needs to raise the $300 million which will serve as initial payment for the preferred shares of Landbank and DBP in the 17-kilometer MRT 3 along EDSA. DBP executive vice president Theresa Quirino said the NDC may just borrow from banks instead of raising money through the issuance of bonds. “NDC may do it through a syndicated loan,” she said.
Ma. Lourdes Rebueno, NDC general manager, said there is nothing final yet although they are still studying their options.
A 75% controlling stake in MRT has been acquired by Landbank and DBP early this year at an estimated shared cost of $800 to $900 million. However, they are required by the Bangko Sentral ng Pilipinas to sell their holdings within the year.
After the initial $300 million payment, Quirino said NDC would eventually acquire the controlling stake of the two government financial institutions.
The BSP and the Department of Finance reminded Landbank and DPB that they should not place a large portion of its investible funds in one venture. These may not give returns in short period and they might end up at a loss, or compete with the private sector.
The Philippine government is spending $130 million on equity rental payments, maintenance rental payments and operating and administrative costs per year. An amount that is too big compared to its annual revenues of P39.56 million.
