San Miguel to acquire 35% of expressway unit

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. will initially acquire a 35-percent stake in consortium that will build the P15-billion Tarlac-La Union Expressway project.

On the sidelines of DMCI Holdings Inc.’s annual shareholders’ meeting yesterday, company president Isidro Consunji said San Miguel has offered to initially invest 35 percent in Private Infrastructure Development Corp. (PIDC) with an option to increase its holdings to as much as 51 percent.

“The intent is to invest up to 51 percent. We’re completing legal documents,” said Consunji.

Consunji said PIDC needs fresh equity to start the construction of the tollroad project. At least P1 billion to P1.5 billion will be needed by August, he said.

The project will be funded through equity contributions of between P6 billion and P6.5 billion, as well as debt. The estimated project cost includes a P2.9-billion subsidy from the government for certain portions of the expressway.

Other shareholders of PIDC, aside from DMCI which owns a 34 percent stake, are the Lopez Group’s First Balfour Inc., EEI Corp., R.D. Policarpio and Co. Inc., D.M. Wenceslao and Associates Inc., J.V. Angeles Construction, J.E. Manalo and Co. Inc., New Kanlaon Construction Inc. and Rockford Development.

The 88.5-kilometer tollroad project will extend from La Paz, Tarlac to Rosario, La Union, providing a seamless land link between Manila and the Northern Philippines.

Construction of the Tarlac-La Union expressway began in September last year and is slated for completion in 2012. Once completed, travel time from Manila to Baguio will be reduced from six to three hours with a safe speed of 80 kilometers per hour. The project’s first phase is set for completion and operation by 2010 while full tollway operations is expected by 2013.

San Miguel’s entry into the tollroad business is in line with its strategic thrust, growth and diversification.

“The North to Central Luzon stretch is a potentially dynamic industrial corridor and the proposed expressway will make it easier and more cost effective to move goods and people from one point of Luzon to another. As a food and beverage conglomerate with one of the most developed distribution networks in the country, we have a strong interest in making it happen,” San Miguel president Ramon S. Ang earlier said.

San Miguel’s diversification has also seen it acquire a minority stake in power utility giant Manila Electric Co. and an option to buy a majority stake in local oil refiner Petron Corp. It has also recently acquired 32.7 percent interest in Liberty Telecom Holdings Inc. and is now in discussions with the stockholders of Express Telecommunications regarding the terms and conditions of a non-binding memorandum of understanding with respect to its possible acquisition of Extelcom shares.

Aside from tollroad and telecommunications, San Miguel also announced plans to venture into mining and water utilities via the $1.1- billion Laiban Dam project.