MANILA, Philippines - The National Development Co. acquisition of the government’s controlling stake in Metro Rail Transit Corp. (MRTC) held jointly by two state-owned financial institutions has been moved to the second quarter of the year.
NDC, the government’s investment arm was supposed to acquire the stake held by the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) in MTRC, the consortium that runs the 17-kilometer MRT-3 along EDSA as early as last year but it needed to raise money first.
NDC is expected to take over by the end of the first quarter but a government source said the company is still doing a “valuation” of the shares.
“So, it will probably be in the second quarter,” said the official.
Initial estimates showed that NDC would need roughly $300 million for the first phase of the “take-out.” The $300 million would serve as initial payment for a portion of the preferred shares held by the two banks in MRT-3.
Landbank and DBP acquired a 75-percent controlling stake in MRT early last year at an estimated shared cost of $800 to $900 million but they are required by the Bangko Sentral ng Pilipinas to sell their holdings.
The source said the BSP has allowed the two banks to sell their holdings in the second quarter of the year.
NDC is looking at issuing bonds to raise funds for the acquisition but may also tap a syndicated loan from private banks to raise the initial $300 million.
Once NDC buys the stake of Landbank and DBP, the government would again sell this to the private sector.
At least five investor groups are vying for the combined controlling stake of the two banks in MRTC.
Of the five groups, three are foreign groups while the two are composed of local investors.
The interested parties are waiting for the two banks to divest their stake in MRTC before conducting due diligence.
The government is spending $130 million per year for equity rental payments, maintenance rental payments, and operating and administrative costs for the elevated railway, compared to annual revenues of only $39.56 million.
Based on a government study presented by the DBP, fares should be increased from an average rate of P12.50 to P60.50 to remain profitable.