3 groups submit bids for Maynilad

Only three groups – Manila Water Co., DMCI-Metro Pacific Holdings and Rubia Holdings-Noonday Asset Management Asia Pte. – submitted their financial and technical bids for the government’s 83.97-percent stake in debt-strapped Maynilad Water Services Inc.

With its failure to show up at yesterday’s deadline for submission of bid proposals, India’s Infrastructure Leasing & Financial Services Ltd. is now out of the race, leaving only the three groups vying for control of Maynilad.

The bid proposals contain the financial bids and the technical and business bids which include the proposed capital expenditure and operational expense.

The Manila Water group, with partners Mitsubishi Corp., BPI Capital Corp. and WZ Co. Inc., was the first to arrive at the bidding venue and to submit its sealed bid, followed by the tandem of Metro Pacific Holdings Inc. and DMCI Holdings Inc. The Rubia Holdings consortium came in during the last two minutes of the 2 p.m. deadline set by the Special Bids and Awards Committee (SBAC) for the submission of the financial and technical bids.

Government corporate counsel and SBAC vice-chairperson Agnes Devanadera said the committee will announce next month which entities met the technical and financial criterias while the winning bidder will be announced on Dec. 8. Notice of the award has been set on Dec. 13.

The government has set a minimum bid price of $56.4 million for its stake in Maynilad held by the state-owned Metropolitan Waterworks and Sewerage System (MWSS). French utilities group Suez SA owns the remaining 16.03 percent. The amount is on top of the $30-million performance bond and the $2.5-million bid guarantee required on bidders that passed the technical and business criteria.

ABN-Amro is the financial advisor of the government in the privatization of its shares in Maynilad. Under the term of reference approved by the board of directors of Maynilad, the winning bidder will take over and continue operations of Metro Manila’s west zone for the remaining years of the 25-year concession. The winning bidder will also assume Maynilad’s $120-million obligation under a "debt and capital restructuring agreement" with the MWSS. ABN-Amro’s Justin Ocampo said the winning bidder must have a minimum capitalization of P6 billion to secure the size of the winning bid.

Aside from this, the winning bidder for the west zone would have to allot an annual capital expenditure of between P3 billion to P4 billion starting 2007 until 2013 to finance the improvement of the system.

Devanadera said of the winning bid price, $56.4 million will go to MWSS and any excess funds will be infused into Maynilad as additional equity which can be used for its capital expenditures to make it financially viable and allow it to pay concession fees and deliver quality service to customers.

Maynilad serves six-million customers in Manila, Makati and Quezon City and the whole of Malabon, Navotas, Muntinlupa, Caloocan, Pasay, Parañaque, Las Piñas, Valenzuela and Cavite towns.

The Lopez family earlier tied up with Lyonnaise Asia Water Holdings Pte Ltd. of France to win the west service concession zone bid out by the MWSS in 1997. However, Maynilad eventually submitted itself to court rehabilitation and ceded control of the franchise to MWSS following its failure to pay fees and other dues to the water regulatory agency. It blamed its financial woes on the financial crisis that battered Asia in 1997.

The Ayala Group holds holds 47.64 percent of the consortium made up of BPI Capital Investments Inc. (17.86-percent equity); British Virgin Islands-based JW International Corp. (11.91 percent) and WZ Co. Inc. of Mauritius (22.59 percent) while DMCI-MPCI is a 50-50 partnership.

The Noonday-Rubia consortium, on the other hand, is led by Rubia Holdings Ltd. (based in Cayman Islands) with a 20-percent equity; Malaysian YTL Power International Berhad, 20 percent; local firm Daiichi Properties and Development Inc., 30 percent, and ABP Holdings Corp. of Luis B. Puyat, 30 percent.