SMC completes purchase of 35% stake in tollway project

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. has completed the acquisition of a 35-percent stake in Private Infra Development Corp. (PIDC), a consortium of construction companies that won the government concession to operate the P15-billion Tarlac-Pangasinan-La Union Expressway project.

The deal involved the purchase by San Miguel’s wholly-owned unit Rapid Thoroughfares Inc. (RTI) of 1.575 million common shares for P1.575 billion, or P1,000 each share. RTI paid P560.85 million of the purchase price upon closing of the deal while the balance will be paid pursuant to the capital calls of PIDC on such dates and amounts to be determined by the PIDC board. 

PIDC is owned 34 percent by Consunji-owned DMCI Holdings and First Balfour Inc. of the Lopezes. Other shareholders include 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.

In a separate disclosure to the Philippine Stock Exchange, DMCI said it will waive its preemptive rights to subscribe to the additional share issuance in PIDC to pave the way for the entry of San Miguel, now the single biggest shareholder in the consortium.

San Miguel even has an option to raise its stake in PIDC to 51 percent.

The purchase is the “most recent step in San Miguel’s strategic transformation to diversify from its core food, beverage and packaging portfolio and marks its entry into infrastructure and tollways,” San Miguel said.

The 88.5-kilometer tollroad project will extend from La Paz, Tarlac to Rosario, La Union, providing a seamless land link between Manila and Northern Philippines. Once completed, it is estimated that the expressway will cut by half the travel time from Manila to Baguio.

The North to Central Luzon stretch is seen as a potential dynamic industrial corridor that will make it easier and more cost effective to move goods and people from one point of Luzon to another.

The three-phase project, which is being undertaken via a build-operate-transfer (BOT) contract between the Department of Public Works and Highways (DPWH) and PIDC, is targeted for completion in 2013, with the first two sections expected to be finished by May 2010 and January 2011, respectively.

The estimated project cost of P15.36 billion includes a P2.9-billion subsidy from the government for certain portions of the expressway. It will initially have two lanes, but two more will be added once the traffic volume reaches 25,000 vehicles a day.