Malaysian firm to exercise right of first refusal over government shares in South Luzon Tollway

MANILA, Philippines - MTD Capital Berhad of Malaysia will exercise its right of first refusal over the shares of government in the South Luzon Tollway Corp. (SLTC) once the equity of state-owned Philippine National Construction Corp. (PNCC) in SLTC is put up for sale.

SLTC president Isaac David also told The STAR that the Malaysian group is also interested in PNCC’s stake in the Manila Tollway Expressway Systems Inc. (MATES), which is SLTC’s tollway operation and management company.

SLTC holds the right to rehabilitate, expand, operate and maintain SLEX under a concession obtained in 2006 PNCC owns a 20- percent stake in SLTC while the remainder is owned by MTD Capital. The latter also owns 30 percent of the MATES where PNCC has a 40-percent stake.

PNCC has been asking the Department of Finance (DOF) to accept the former’s stake in the SLTC and MATES as partial satisfaction for PNCC’s debts to government estimated at over P5.6 billion.

PNCC earlier received an unsolicited offer from Metro Pacific Tollways Corp. (MPTC) for the acquisition of its 20 percent stake in SLTC but PNCC president Ma. Teresa Defensor said 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.

The PNCC president earlier 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.

She added 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.

But with a new administration in place, Defensor said it will be up to the new government to decide whether to accept PNCC’s proposal or not.

The governments owns about 45.5 percent of the debt-saddled PNCC, followed by the Government Service Insurance System (GSIS) with 27 percent, and Universal Holdings Corp. with 14 percent.

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.