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Megawide notes raise P6.5b

By Jenniffer B. Austria | Posted on Dec. 10, 2012 at 12:01am
[ manilastandardtoday.com ]
Citicore-Megawide Corp., a joint venture between listed construction company Megawide Corp. and parent Citicore Holdings Investment Inc., raised P6.5 billion from the issuance of fixed rate notes, which it will use to finance the building of schools for the Education Department.
Megawide chief finance officer Oliver Tan said during the signing ceremony the 10-year fixed rate notes were oversubscribed, with total demand reaching P8.1 billion.
“The P6.5 billion, together with the equity of P2 billion for a total of P8.5 billion, will be sufficient to meet funding for the phase 1 of the two packages,” Tan said.
The Megawide-Citicore partnership in August won a bidding for the contract to build  school infrastructure projects of the DepEd under the so-called Public-Private-Partnership scheme of the government.
Megawide under the build-lease-transfer agreement will construct 2,885 classrooms in Region 3 and 4,259 classrooms in Region 4-A.
In exchange, the government will make annual lease payments of P532 million for Region 3 classrooms and P760 million for Region 4-A classrooms over the next 10 years.
The two contracts form part of the government’s plan to build around 9,300 three- and two-story classrooms.
PNB Capital was the lead arranger and sole bookrunner for the notes facility while Development Bank of the Philippines and Land Bank of the Philippines were co-lead arrangers.
The noteholders include Metropolitan Bank & Trust Co., Bank of the Philippine Islands, PNB, LandBank, DBP and Bank of Makati.
Tan, meanwhile, said the company expects to achieve a net income of P900 million this year and post revenues of P8 billion to P8.5 billion.
Tan said the company was slowly diversifying its construction portfolio with its foray in the PPP project.
Megawide has generated the bulk of construction revenues from the residential projects of SM Development Corp., owned by retail magnate Henry Sy.
The Sy family holds a minority interest in Megawide.
Tan said SM Development now only accounted for 50 percent of the company’s revenues from a high of 73 percent. Megawide also started to book revenues from office buildings and hotels.
“Moving forward we are looking to book more on social infrastructure projects like schools and hospitals. That would somehow give us a more balance and diversified book order,” Tan said.
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