Manila Water secures $30-M credit facility with IFC

Ayala-led utility firm Manila Water Co. has signed a $30-million standby credit facility with the International Finance Corp. (IFC) to fund its capital expenditures over the next three years.

In a disclosure to the Philippine Stock Exchange, Manila Water said the company was able to amend a previous loan agreement with the IFC in 2004.

The new loan facility, which will mature in 10 years, may be disbursed in part or in whole as a dollar loan or a peso loan, Manila Water said.

Manila Water earlier secured a P1.5-billion loan facility from several financial institutions for its massive capital investment program within the east zone of Metro Manila.

The loan, arranged by ING Bank, was extended by the consortium of Sun Life of Canada, Security Bank, Equitable PCI Bank and Land Bank of the Philippines.

Manila Water said the loan, which will be drawn in two tranches, will have a term of seven years. Through this peso-denominated loan, the company will be able to take advantage of the improving domestic borrowing rates.

Manila Water plans to spend around P4 billion to P5 billion every year in the next five years to improve its services to the public.

A large part of the budget will be used to extend the water network to the high-growth areas of Taguig and Antipolo, Taytay, Cainta, San Mateo, Montalban, Angono, Binangonan, Baras and Jalajala in Rizal province.

The company has also allocated significant amounts to improve sewer and sanitation services.

For the past nine years, Manila Water has invested a total of P19 billion in capital expenditure and concession fees to improve the water and wastewater services in the east zone. Through its relentless pipe replacement program, the company has reduced system losses to 30.2 percent as of June 2006, from a high of 63 percent when it started in 1997.

As of end-June this year, the company’s billed volume increased to 933 million liters per day from only 440 mld in 1997.

Philratings considered Manila Water’s workable regulatory framework, well-planned capital expenditure and flexible financing programs to attain growth and efficiency targets; an effective management able to pursue complementary expansion and diversification strategies; sustained earnings and cash flow generation, providing strong coverage of interest and debt service.

Philratings also took note of Manila Water’s strong ownership support from its major stockholders led by Ayala Corp., United Utilities Pacific Holdings and the International Finance Corp.

Manila Water is also planning to acquire the government’s 83.97 percent stake in Maynilad Water Services Inc., which supplies water to the west zone of Metro Manila.