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Connector road joint venture structure finalized this month

Posted on December 05, 2013 10:17:13 PM [ BusinessWorld Online ]

THE FRAMEWORK for a new joint venture that will build a multibillion-peso road linking North Luzon Expressway (NLEx) and south Luzon Expressway should be finalized by the end of this month, a top official of one of the parties said in a text message earlier this week.

Metro Pacific Investments Corp. (MPIC) had proposed a P22.95-billion 13.4-kilometer four-lane expressway that will run over Philippine National Railway lines from Caloocan City to Makati City.

A top official of MPIC subsidiary Manila North Tollways Corp. (MNTC), which operates NLEx, said he expects the joint venture structure for the new project to be finalized by the end of the month, after getting the green light from the Toll Regulatory Board (TRB).

“We hope to finalize the structure of the joint venture later this month after receiving the go signal from the TRB and PNCC (Philippine National Construction Corp.),” MNTC President and Chief Executive Officer Rodrigo E. Franco said via text.

MNTC, a joint venture (JV) of Metro Pacific Tollways Corp. (MPTC) and PNCC, submitted its investment proposal to the toll body last month.

“Our proposal is to build the connector road using the existing JV agreement -- MNTC as the implementing agency,” Mr. Franco explained.

This means the existing supplemental Toll Operations agreement (sTOa) will be amended to include components of the Connector Road.

The existing joint venture structure has MPTC with 67.1% interest and PNCC with just 2.5%.

Mr. Franco said that it is much easier to amend the existing sTOa than to go through a new agreement.

PNCC President Luis F. sison confirmed that the state-run firm is now in talks with MPTC.

“We are in the midst of a negotiation with the MPIC group and we are represented by a board-created negotiating committee,” Mr. sison said via text message.

He noted, however, that there are certain details the two parties need to settle first before agreeing on the final joint venture structure.

“There are legal and financial issues that must be ironed out, but I think that they can all be resolved as long as both parties keep the importance of this road within their sights at all times,” Mr. sison said, without elaborating.

Toll regulators were not replying to queries.

“The proposal to use the old JV comes from MNTC and we have not agreed as legal and financial issues have to be resolved,” Mr. sison admitted, but would not go into details.

The final joint venture structure is also subject to government approval.

MPTC is also a toll road subsidiary of MPIC.

MPIC reported a total comprehensive income of P8.101 billion as of september, 7.8% more than the P7.515 billion recorded in the same nine months last year, as revenues rose 11.40% to P22.879 billion from P20.537 billion on increases in the conglomerate’s water supply and sewerage, tollway, hospital and school revenues.

Shares of MPIC lost 19 centavos or 4% to close at P4.56 apiece yesterday from P4.75 each last Wednesday.

MPIC is a local unit of Hong Kong-based First Pacific Company Ltd., which partly owns Philippine Long distance Telephone Co. (PLdT). Hastings Holdings, Inc., a unit of PLdT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. -- Lorenz Christoffer S. Marasigan

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