Vol. XXII, No. 121 [ BusinessWorld Online ]
Wednesday, January 21, 2009 | MANILA, PHILIPPINES
THE GOVERNMENT is no longer looking to completely buy out the owners of EDSA’s Metro Rail Transit (MRT) system and is now favoring a less expensive deal that will still let the state take control of the line.
MRT Authority General Manager Robert T. Lastimoso said the system’s builder, MRT Corp. (MRTC), wants $1.4 billion, almost double the $800 million the government is willing to pay.
Instead of a complete buyout, he said the government would now be working on acquiring a majority stake.
"[A]s long as [the government] can take control of the board, that will be fine," Mr. Lastimoso said on Tuesday.
MRTC is the Sobrepeña-led consortium that built the MRT-3 line, which runs 17 kilometers from North Ave. in Quezon City to Taft Ave. in Pasay City. It operates under a build-lease-transfer agreement with the government that expires in 2025.
The original MRT Corp. consortium had for its members Ayala Land, Inc., Anglo-Philippine Holdings Corp., Sobrepeña family subsidiary Fil-Estate Management, Ramcar, Inc., and Greenfield Development Corp., which infused $190 million in equity in 1997.
When the government — the lessee — became remiss on payments to MRTC, some members of the consortium decided to cash in by packaging the future compensation as zero-coupon bonds. These bonds will have to be secured under the takeover tack, adopted by the state on reasoning that doing so would allow it to cut its costs.
Mr. Lastimoso said some of the bonds were now in the hands of investment firms Elliott Associates and Goldman Sachs, which he claimed "are really squeezing out everything they can from us."
Representatives of both firms were not immediately available for comment.
Mr. Lastimoso said the government did not push through with the full buyout as it meant spending more money than they would have saved. — P. L. G. Montecillo
