Meralco needs $120M to pay maturing obligations next year

The Manila Electric Co. (Meralco) would need around $120 million next year to finance its long-term maturing obligations, a ranking Meralco official said.

In a press conference after the company’s annual stockholders’ meeting, Meralco treasurer Rafael Andrada said they are trying to raise $200 million from the capital markets to finance their maturing debts this year and in 2005.

For the second half of 2004, the power utility firm will have to raise about $45 to $50 million to fund its remaining long-term debts for the year.

Andrada said they are also currently fleshing out a deal with their short-term lenders for the grant of a 90-day extension for the payment of $79 million in short-term obligations due to mature next month.

Meralco has total obligations of $579 million of which $400 million are long-term debts ($200 million from multilateral creditors and another $200 million from commercial lenders). The remaining $79 million are short-term debts.

If they can secure all the necessary approvals this month, Andrada said they could launch the refinancing scheme by next month.

By June this year, the company will also file with the Energy Regulatory Commission (ERC) its application for Phase IV of its refund program.

Leonardo Mabale, head of Meralco’s refund management task force, said they are eyeing two options for the last phase of the refund.

Mabale said they have classified the residential/commercial customers that fall under this phase into small, medium and very large categories. Those customers falling under the small category will be refunded through fixed to bill spread over three years, with the total refund spread over 36 equal payments based on the refund amount of the customer. This group will represent about P4.6 billion of the total P18.6-billion refund amount for Phase IV.

For those falling under the medium and large customers category, Mabale said they will be given an option to either avail of the fixed credit to bill or issuance of refund notes which can be redeemed over a five-year period. About P14 billion will be needed to cover this group. These notes, Mabale said, will mature every quarter and can be sold to investment houses or traded in the country’s stock exchange.

Mabale said if the ERC approves their application, they will need about nine months to a year to process the proposed refund notes. "Our target is by May or June next year, we will be able to come out with these notes," he said.

But Mabale pointed out that they would still need to thresh out a few more details with some concerned business groups before they could submit their formal application with the regulatory body.