Megawide finalizing loan deal for hospital PPP venture

Megawide finalizing loan deal for hospital PPP venture

LISTED BUILDER Megawide Construction Corp. is wrapping up a deal for a syndicated loan worth nearly P3 billion that will help bankroll the current administration’s first hospital public-private partnership (PPP) project, a senior company official said yesterday.

“We are almost done with the financial closure. It’s a syndicated loan. We are raising around P2.9 billion for Philippine Orthopedic,” Chief Financial Officer Oliver Y. Tan told reporters over lunch in Makati City. “The rest would be internal [funding].”

The company has tapped Land Bank of the Philippines as the lead arranger for the syndicated loan from “two to three banks.” Mr. Tan declined to name the lenders.

Megawide’s consortium with World Citi, Inc. last Dec. 11 obtained a notice of award for a P5.7-billion contract to modernize the Philippine Orthopedic Center in Quezon City. The project involves construction of a new 700-bed hospital and a 25-year concession period during which World Citi will manage the hospital.

“We are in the design phase. In the last quarter of next year, we hope to start construction,” Mr. Tan said.

“It will take two years to complete the project, we are looking at the first quarter of 2017 for it to be up and running.”

Last week, Megawide, together with its Indian partner GMR Infrastructure Ltd., tendered the best bid for the P17.5-billion PPP project to expand and operate Mactan-Cebu International Airport, after offering P14.40-billion upfront payment to the government on top of shouldering the construction cost.

The Megawide-GMR bid is still being evaluated by the Transportation department, and a notice of award could be issued on Jan. 6 next year.

Mr. Tan said Megawide could tap existing bank lines if his company bags the project.

“Tapping the equities market has always been an option but we don’t want to be diluted anymore, so we might probably do a stock rights offering,” Mr. Tan said, referring to a share sale wherein existing shareholders could maintain ownership in the company.

“But we are ready without even going to the capital market. Obviously, you don’t go to a war without ammunition.”

The airport project could be the fourth PPP deal to be awarded to Megawide.

The company last October bagged two of the five contracts under the P8.8-billion PPP for School Infrastructure Project (PSIP) Phase II.

Its consortium with Citicore Holdings Investment, Inc. was one of two groups that last year won the P16.42-billion PSIP Phase I.

Megawide recorded a net profit of P983.24 million as of September, up 55.21% from P633.50 million in the same nine months last year. Contract revenues increased 28.70% to P7.22 billion from P5.61 billion, while contract cost rose 26.65% to P5.94 billion from P4.69 billion.

Megawide shares gained 46 centavos or 3.33% to close P14.28 apiece yesterday from P13.82 each last Tuesday.

source:  Businesswolrd