CEBU CITY – The GMR Megawide Cebu Airport Corporation (GMCAC) has completed a debt rebalancing deal with its lenders and said it will save P4.5 billion in cash in the next 3 years to sustain the operations of the Mactan-Cebu International Airport (MCIA).
The cash was initially earmarked to pay GMCAC’s P23.9-billion debt used to develop, operate, and maintain the country’s second-biggest airport.
GMCAC said the debt rebalancing program involves the relaxation of original debt servicing and covenant commitments, clearing the airport operator’s runway for full recovery. In turn, the amount will be amortized throughout the life of the loan, with the bulk of GMCAC’s debt payments scheduled towards 2027 to 2029.
GMCAC is a consortium between one of the Philippines' leading construction firms, Megawide Corporation and India's GMR Group, a world renowned infrastructure developer with an excellent track record of transforming airports into exciting, efficient award winning airports in India and overseas. The consortium has been formed to manage and develop the Mactan Cebu International Airport for the next 25 years, under the Philippine government's Public Private Partnership program.
Aside from the lenders, BDO Capital and Investment Corp., which acted as the financial advisor for the transaction, played an instrumental role in assuring the company’s creditors of the long-term, mutually beneficial advantages that can be realized from the agreement.
“Assessing the current situation, multi-sectoral cooperation will be very crucial for the country’s economic take-off once smoke from this pandemic clears. The support of financial institutions, both local and regional, to private companies is important to reflect confidence in their business models and the entire country’s economic growth potential,” BDO Capital president Eduardo Francisco said.
During the negotiations, BDO Capital, with the support of all parties, developed a mutually acceptable proposition to amend the original schedule of the 15-year, HP23.9-billion project financing for the GMCAC’s 25-year concession agreement to develop, operate, and maintain MCIA.
“For us, facilitating this transaction will help our long-time partner, Megawide (Construction Corporation) and its airport subsidiary (GMCAC), recover from the ill effects of the crisis. Under the stewardship of Megawide, we have seen how MCIA improved and expanded over the last six years pre-pandemic, to become one of the country’s and world’s best airports,” Francisco said.
He said this track-record makes them “very optimistic” of the airport’s growth trajectory as soon as normalcy returns to the Philippines’ travel and tourism industry.
For the lenders, this will also open up fresh opportunities for expanding relationships, considering the company’s aggressive and exciting expansion plans for the country’s second-busiest air hub, Francisco added.
Megawide recorded its highest construction contracts at P68.4 billion in 2020 amid the pandemic, including the P26-billion Suncity West Side City to be completed in two and half years and the Malolos-Clark Railway Project Package 1.
The infrastructure giant has also been aggressively pursuing and confident in securing deals under major infrastructure projects, like the Metro Manila Subway System and North-South Commuter Railway Project-South Line, which are scheduled for bidding this year.
The company is currently laying the groundwork
for the redevelopment of the Carbon Market in Cebu under a 50-year
joint-venture agreement with Cebu City, and is in active discussions with the
Baguio City government for a potential landport location. “All these
developments provide Megawide, as well as its financial and business partners,
with a pipeline of exciting and attractive growth prospects and value-creation
initiatives moving forward,” Megawide said. (Carlo Lorenciana. Cebu
Examiner contributed to this report.)
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