Acting on the deadline given by the Power Sector Assets and Liabilities Management Corp. (PSALM), US power firm AES Corp. may sign up soon a $200-million syndicated loan to cover part of its 40-percent upfront cash downpayment for the purchase of the 600-megawatt Masinloc coal-fired power plant.
Industry sources said with the closing of the deal expected on April 4, AES may tap consortium of banks to finance the acquisition.
Among the banks being considered are Bank of the Philippine Islands, Rizal Commercial Banking Corp., Banco de Oro and ING.
The sources added that Masinloc Power Partners Co. Ltd., the corporate vehicle used by AES to purchase the Zambales power plant, may also opt to get the help of its shareholders.
“Definitely, AES will raise the money for its payment with PSALM,” an informed source said.
Aside from the syndicated bank loan, AES is also negotiating with the International Finance Corp. (IFC) and Asian Development Bank (ADB) for possible financing. But it was learned that AES has to pass through a strenuous list of conditionalities before it could get hold of the multilateral loans.
PSALM, in a statement, clarified that the sunset date will be on May 23, as the earlier reported deadline of May 15 failed to count the non-working days of the Lenten season.
The 40-percent upfront payment worth $372 million is required for the turnover of the asset, and the winning bidder is contractually bound to perform its commitment and obligations under the asset purchase agreement.
This downpayment is crucial for the government as proceeds from the sale of assets of National Power Corp.(Napocor) is being used to pay up its loan and thus narrowing the country’s budget deficit.
PSALM said it is closely coordinating with AES to close the deal as scheduled.
“PSALM and Masinloc Power are acting as a team to accelerate the closing of the transaction and, to this end, PSALM has maintained open communications with Masinloc Power. PSALM has in no case threatened Masinloc Power with forfeiture of its performance bond,” said Helena C. Tolentino, PSALM vice president for contracts management and corporate services.
Masinloc Power won the bidding for the Masinloc coal-fired thermal power plant last July 2007 with its bid of $930 million.
“Masinloc Power has stressed it will pay 100 percent of its bid offer on closing date,” Tolentino said. “We are aware of its efforts to meet its obligation and we appreciate the support of IFC and other institutions that are helping Masinloc Power in this regard.”
The asset purchase agreement for the Masinloc power plant provides that the transaction should close no later than 270 days after the effective date of Aug. 28, 2007.
“PSALM is ready with its deliverables, including a coal sale agreement and a program for the rehabilitation of the power plant, and we hope to close the sale with Masinloc Power as soon as possible so that the benefits from the privatization of the Masinloc plant will be immediately felt by the Filipino people,” Tolentino said.