SMC acquires majority stake in MRT-7 project

MANILA, Philippines – Diversifying conglomerate San Miguel Corp. (SMC) has signed a memorandum of understanding (MOU) with the controlling owner of Metro Rail Transit Phase 7 (MRT-7) for the acquisition by SMC of a majority stake in the railway project.

SMC president Ramon Ang told The STAR that they have entered into an agreement with businessman Salvador “Buddy” Zamora III, who owns 63 percent of Universal LRT Corp. (ULC), which in turn wholly owns the MRT-7 project. The agreement provides that Zamora will sell his majority interest in ULC to SMC.

Zamora acquired majority control of the ULC consortium in 2008 from its original proponent, Israeli businessman Eli Levin.

Ang said they are also exploring the possibility of investing in a light rail transit project in Cebu, as well as other projects in Cagayan de Oro, Davao, and Iloilo.

The STAR earlier reported that SMC is interested in building a bullet train that will run the Laoag-Manila-Bicol route. Ang said they have commissioned a group that includes international companies with experience in bullet trains to conduct a study on this.

Asked how much the 63 percent stake in ULC costs and when the actual sale will be made, Ang said SMC is still undertaking due diligence work.

MRT 7 is a build-“gradual transfer”-operate, maintain and manage project for the development, financing, operation and maintenance of a 22-kilometer light rail transit route that extends from the MRT Line 3’s North Edsa terminal to San Jose del Monte in Bulacan.

ULC said it has tapped Morgan Stanley as its financial advisor to raise equity and debt needed to finance the construction of the $1.3-billion project.

ULC vice-chairman Roberto de Ocampo said that while it is true that Morgan Stanley has approached SMC to be part of the project, there are other interested parties that are also in talks with the financial advisor.

In response, a source from SMC said Zamora may just have failed to inform de Ocampo that an agreement has already been reached between SMC and Zamora.

Earlier, SMC said it has been offered to a majority interest in MRT-7 and that the company is negotiating with the members of the consortium of the project. There were reports that SMC was already in the “advanced stages of negotiation” to take control of ULC, the consortium tasked to build the MRT 7 project.

Aside from Zamora, one other stakeholder in ULC is the SM Group of Companies, which plans to put up a mall in San Jose del Monte, Bulacan that will have an access to the MRT-7 line.

SMC has been expanding from its core food and beverage business and into heavy industries such as power, infrastructure and telecommunications to fuel faster future growth.

The MRT-7 project involves the construction of a 22-km light rail transit system carrying at least half a million passengers a day.

The project also includes an intermodal transport terminal—a transportation hub for buses and other forms of public conveyances—in San Jose del Monte, as well as a 22-km, six-lane feeder highway from the northern end of the line to Bocaue, Bulacan. This highway will link the intermodal terminal to the North Luzon Expressway.

As envisioned by the proponents, the rail component of MRT 7 project will initially operate 108 rail cars in a three-car train configuration. Initial capacity is projected at 448,000 passengers a day, but will eventually be expanded to accommodate as many as 850,000 passengers daily.

The rail line will have 14 stations, namely: North Edsa, Quezon Memorial Circle, University Ave., Tandang Sora, Don Antonio, Batasan, Manggahan, Doña Carmen, Regalado, Mindanao Ave., Quirino, Sacred Heart, Tala and Araneta San Jose Del Monte.

The intermodal terminal, on the other hand, will be able to accommodate 60 buses and will also feature passenger facilities and amenities.