PNCC offers SLEX stake to pay P5.6-billion debt

MANILA, Philippines - The state-led Philippine National Construction Corp. (PNCC) has asked the Department of Finance (DOF) to accept PNCC’s stake in the South Luzon Expressway (SLEX) as partial satisfaction for the former’s debts to government estimated at over P5.6 billion.

PNCC owns a 20-percent stake in the South Luzon Tollway Corp. (SLTC) while the remainder is owned by MTD Capital Berhad of Malaysia. MTC Capital also owns 30 percent of the Manila Tollway Expressway Systems Inc. (MATES) while PNCC has a 40-percent stake in MATES.

SLTC holds the right to rehabilitate, expand, operate and maintain SLEX under a concession obtained in 2006 while MATES is SLTC’s tollway operation and management company.

Earlier, PNCC turned over to MATES the operations and maintenance of SLEX after the Toll Regulatory Board (TRB) approved and issued a toll operation permit to SLTC authorizing MATES to take over the operation and maintenance of project toll roads 1 and 2 of SLEX.

PNCC president Ma. Teresa Defensor told The STAR that they have not received a response from the DOF on the proposal to convert PNCC’s debts into equity via a dacion en pago arrangement.

Defensor said that if this proposal is accepted, then it will be up to the DOF to sell government’s stake in SLTC and MATES.

PNCC earlier received an unsolicited offer from Metro Pacific Tollways Corp. (MPTC) for the acquisition of its 20 percent stake in SLTC but Defensor was quoted as saying earlier that they must first offer the stake to its Malaysian partner which has a right of first refusal. MTD was also the sole funder of the SLEX rehabilitation that started in 2005.

San Miguel Corp. (SMC) has also expressed interest in acquiring PNCC’s 20 percent stake in SLTC if there would be a public bidding.

Defensor said that the sale of the PNCC’s 20-percent stake in SLTC would come in a package, where the buyer must also buy the PNCC’s 40-percent stake in MATES.

Aside from billions of pesos in payables to the TRB, PNCC’s other debts include a P5.6-billion obligation to the Bureau of Treasury for unremitted withheld taxes, and a P2.4-billion debt to the Philippine National Bank.

The Supreme Court has affirmed with finality its ruling in December that declared illegal the P6.2 billion compromise agreement between Radstock and PNCC.

Defensor said that even if the DOF accepts PNCC’s stake in SLTC and MATES, it would still not be enough to completely settle PNCC’s obligations to government.

The PNCC was earlier planning to use the proceeds from the sale of its stake to build the road that will connect the SLEX near the Susana Heights interchange to the southern end of the Daang Hari road in Cavite; help the government with its budget deficit; and pay part of its P5-billion debt to the government.

But instead of PNCC selling its stake in SLTC and MATES and then using the proceeds to satisfy part of its debts to government, Defensor said it would be simplier if PNCC just use its stake to settle its debts and then let the DOF privatize government’s equity in the two companies.

“We also did not want to sell it ourselves to avoid criticisms of a midnight deal or that the sale has some political color to it,” she added.