Vol. XXII, No. 114 [ BusinessWorld Online ]
Monday, January 12, 2009 | MANILA, PHILIPPINES
THE GOVERNMENT has again changed its tack on a long-stalled takeover of Metro Manila’s overhead rail system.
The new scheme will involve the buyout of bonds sold by some members of the Sobrepeña-led Metro Rail Transit Corp. (MRTC) consortium — a deal that would require the state to treat with offshore bondholders, government negotiators said.
The government initially looked at floating bonds, to the tune of $900 million, to finance the purchase. The plan, announced early last year, was shelved after market conditions deteriorated.
The Finance department has tasked state lender Development Bank of the Philippines (DBP) to complete the buyout, negotiators said.
The latest plan, however, may be complicated as the bondholders are not from the original MRTC consortium, MRT Authority General Manager Roberto T. Lastimoso said.
"The government wanted to buy out the equity from the original investors. But when we started the negotiations, they (the consortium) said they had no more control of the shares. Foreigners are now sitting on the board," Mr. Lastimoso told BusinessWorld.
The original MRTC consortium had for its members Ayala Land, Inc., Anglo-Philippine Holdings Corp., Sobrepena family subsidiary Fil-Estate Management, Ramcar, Inc., and Greenfield Development Corp., which infused $190 million in equity in 1997.
As the government — the lessee — defaulted on the payment of lease rentals to MRTC, some members of the consortium decided to cash in and tapped the international capital market in 2002 by packaging the future compensation as zero-coupon bonds.
Mr. Lastimoso said some of the bonds were now in the hands of investment firms Elliott Associates and Goldman Sachs.
Representatives of both firms were not immediately available for comment, nor were MRTC representatives.
"This is what the government is looking into. The DBP is willing to finance the buying of the bonds," he said.
DBP chief Reynaldo G. David said the bank was willing to consummate the buyout in behalf of the government, but wants to be assured that the state will redeem the bonds.
"It [buyout] has to be done. But at the end of the day the national government, the Treasury, must come out and say there is a takeout. If we buy the bonds, they [government] should buy it from us," Mr. David said.
In a separate interview, National Treasurer Roberto B. Tan said the government was still studying the state lender’s exit strategy.
"It depends," he said when asked if the government would buy back the bonds.
The government’s partnership with the MRTC has been mired by legal wrangling over the MRT-3’s rail extension, as well as the state’s concern about financing a P48 per passenger subsidy.
An MRTC takeover is expected to save the government some $400 million.
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