News / MegaProject 326: Megawide secures project finance for PPP projects

MegaProject 326: Megawide secures project finance for PPP projects

🕔 October 7, 2014

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Philippine contractor Megawide Construction Corporation has secured finance for the new Philippine Orthopedic Center (POC) PPP project and for the Mactan-Cebu International Airport terminal project.

In early September we had already reported that the firm was raising funds for the development of the P17.50-billion (US$400 million) airport project.

According to Manuel Louie B. Ferrer, president of concessionaire GMR-Megawide Cebu Airport Corp. (GMCAC), the total amount committed by a consortium of financial institutions led by BDO Unibank, Inc. has exceeded the estimated project cost.

GMCAC, the consortium formed by India's GMR Infrastructure (40%) and Megawide Construction Corporation (60%), expect to achieve financial closure for the Mactan-Cebu International Airport terminal project between last October and early November. It is expected that the funding for the project will be 70% debt and 30% equity.

On 22 April 2014 the Philippine Department of Transportation and Communications (DOTC) and GMCAC signed the project contract. The team offered the lowest bid for the US$400 million airport terminal tender by offering a concession premium to the Government of 14.4 billion peso (US$328.2 million).

The project included the construction of a new passenger terminal with an annual capacity of 8 million, the rehabilitation of the old terminal, and the operation of the whole airport facility for 25 years. Megawide and GMR aim to build an airport terminal that can accommodate 25 million passengers a year, more than three times the government requirement. Construction of the airport is expected to start on January 2015.

Megawide Construction Corporation has also entered into a loan deal with a team of banks to fund the new Philippine Orthopedic Center (POC) PPP project. The banks are Land Bank of the Philippines, Land Bank of the Philippines-Trust Banking Group and the Development Bank of the Philippines.

The Philippine consortium formed by Megawide Construction Corp. and World Citi Inc. was declared the winner for the new POC PPP project on 11 December 2013. The consortium bid P5.672 billion (US$131 million) for the project. The consortium was the only bidder for the project.

The POC project involves the increase in bed capacity from the current 300 beds to 700 beds, the modernized POC will require a total of 1,575 staff from its present 927 staff or a hefty 70% increase in employment. It includes the design, build, finance, operation and maintenance of  the facility, for 25 years, government still retains ownership of the POC.

The new facility is expected to be completed by 2017.

Both projects are part of President Benigno Aquino III's Private Public Partnership (PPP) programme.

In early february we published that Employees of the Philippine Orthopedic hospital and other social and health groups asked the Philippine Supreme Court (SC) to stop the construction of the new project under the PPP model. They said the government has abandoned its duty to provide and ensure a basic social service such as health to private entity at the expense of the poor and underprivileged.

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