[ Manila Bulletin Online ] September 26, 2008
Megaworld Corporation and Banco De Oro Unibank, Inc. (BDO) have signed a P5-billion receivable and end-user’s financing deal – the largest of its kind in the industry to date.
In a disclosure to the Philippine Stock Exchange (PSE) yesterday, Megaworld said the two firms worked on an innovative receivable and end-user financing program which effectively unlocks liquidity for Megaworld and allows it to fast track its residential developments.
BDO, on the other hand, will be able to build up its consumer loans through access to Megaworld’s rich pool of residential buyers which are prime candidates for consumer loan mortgages.
Megaworld executive director Kingson Sian said in a telephone interview that, under the agreement, Megaworld will be selling its receivables in the form of financing packages availed by buyers to BDO.
He noted that these receivables are all current since "we do not have any delinquent accounts." Sian added that the sale will be at a discount to the face value of the receivables "since these will be paid out over time and there will thus be some interest rate considerations."
However, Sian said their agreement with BDO prevents them from disclosing the rate of discount and the interest rate assumption. BDO will also be offering financing packages to new buyers of Megaworld’s projects.
"We have actively collaborated with Megaworld to create an innovative way of providing receivable and consumer mortgage financing," said BDO president Nestor Tan.
He noted that "Megaworld is one of our leading real estate relationships and we obviously feel comfortable with the company’s management and its development capability."
Megaworld said it continues to be optimistic about the property market with its reservation sales projected to hit record level of P24 billion by year-end. The company has one of the most extensive landbank in Metro Manila and is the largest provider of mid-income housing in the country.
"This is a good example of what a strong partnership with BDO can produce. Our leading position in providing mid-income housing fits well with BDO’s strategy of growing its residential mortgage portfolio. The BDO relationship has grown together with our business," said Megaworld chairman Andrew Tan.
Megaworld raised its net income by 23 percent to a record P1.79 billion in the first half of 2008 from P1.45 billion in the same period last year due to strong core earnings from its residential and business process outsourcing-oriented office developments.