SMC to acquire up to 51% of MRT 7 builder

MANILA, Philippines - Diversifying conglomerate San Miguel Corp. (SMC) has signed a deal to acquire up to 51 percent of Universal LRT Corp. (ULC), the company that will build the Metro Rail Transit (MRT) Line 7 project linking North Avenue in Quezon City to San Jose Del Monte in Bulacan.

In a disclosure to the Philippine Stock Exchange yesterday, San Miguel said the transaction was in line with the approval granted by its board last March 15.

However, San Miguel did not disclose financial details and other terms of the agreement relating to the sale and purchase agreement.

The closing of the deal is also subject to certain conditions, San Miguel added without elaborating.

ULC is 63 percent owned by businessman Salvador Zamora III along with other shareholders including SM Prime Holdings and the Yuchengco-led EEI Corp.

The MRT 7 project involves the construction of a 22-kilometer light rail transit system and an intermodal transport terminal – a transportation hub for buses and other forms of public conveyances.

The rail and road network is expected to cost as much as $1.3 billion, while the commercial and residential developments expected to rise along the route would cost another $2 billion.

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 Avenue, Tandang Sora, Don Antonio, Batasan, Manggahan, Doña Carmen, Regalado, Mindanao Avenue, Quirino, Sacred Heart, Tala and Araneta San Jose Del Monte.

The entire project is expected to be fully completed in 42 months, although parts of it may be made operational in phases.

Once completed, ULC will operate and maintain the rail service, the intermodal terminal and the highway for a period of 25 years. The government will get a 30-percent share of net passenger revenues and a 20-percent share of other earnings.

San Miguel, which built its first brewery in 1890, been aggressively moving into heavy industry including power, mining, oil refinery, telecommunications and infrastructure to spur faster growth.

San Miguel earlier said it was in talks to buy 67 percent of Ausphil Tollways Corp, the main proponent of an expressway project in the northern part of the main Luzon island.

It said it was also planning to invest in an airport terminal, a bullet train and may acquire more coal mines in Southern Mindanao to support plans to build coal-fired power plants.