Malacañang amenable to extending deadline to YNN-Ranhill

Citing national interest, Malacañang said yesterday it is amenable to extending the deadline given to YNN-Ranhill consortium to pay $227.54 million as a down payment for the purchase of a 600-kilowatt power plant in Masinloc, Zambales.

Presidential chief of staff Michael Defensor did not say how much slack would be extended to YNN-Ranhill but said the government would immediately rescind the contract of sale with the consortium if a new buyer comes along with the money for the coal-fired power plant.

Should Malacañang grant an extension, it would be the fourth given to the consortium since last year.

Defensor said that based on reports of officials from the Department of Energy (DoE) and the Power Sector Assets and Liabilities Management Corp. (PSALM), the government would still be getting the "best price" for the Masinloc power plant of more than $500 million from YNN-Ranhill.

"So for me, an extension is not too bad for us as long as they’re able to raise the money," Defensor said.

Just last Wednesday, Executive Secretary Eduardo Ermita warned that the government may withdraw the award given to the YNN if it again fails to pay the $227-million down payment.

Ermita said PSALM, the government corporation that sold the power plant, could review the sale contract and even hold a new bidding.

But Defensor said the matter of giving YNN-Ranhill an extension would be first discussed thoroughly to make sure that the government would not be at the losing end.

He also said the government would immediately entertain new buyers if they could show the government a better deal and could immediately pay the down payment.

"If someone from the private sector said ‘Yes, we can give that same amount and we can pay that amount,’ then by all means, let’s not extend, but if no one will say that and we will get a lower bid because of a few vested private interests, then I think it is also for the national interest for us to extend," Defensor said.

A PSALM insider confirmed yesterday that the YNN Pacific Consortium Inc., with its proposed Malaysian partner Ranhill Berhad, failed to deliver the required down payment for the Masinloc plant.

"We (PSALM) have not received anything. We are still waiting up to now. The deadline is up to end of the day (June 30)," the PSALM source said.

Meanwhile, Ranhill, in a disclosure to the Malaysia Stock Exchange dated June 29, said its board of directors had extended the deadline for the first tranche of share sales agreement (SSA) with YNN Consortium to July 31.

"Under the SSA in relation to the proposal dated June 15, 2006, the conditions precedent pertaining to the acquisition of 60-percent equity interest in YNN (first tranche) are to be fulfilled (or) waived by June 30, 2006," Ranhill said in its disclosure.

The extension of the deadline of the buyout deal may mean that YNN may not have sufficient funds to finance the down payment for the power plant. Ranhill came in earlier as the white knight for YNN group, ready to infuse much-needed capital to fund the acquisition.

Last week, Ranhill Berhad disclosed to its local bourse that it would acquire the entire equity interest of YNN Pacific for $8 million. Ranhill said it will acquire YNN’s 25,000 common shares for P100 per share.

Based on the disclosure, Ranhill’s proposed acquisition of YNN Pacific will be carried out in two tranches, each of which has conditions that need to be met before the actual transaction is consummated.

Under the first tranche, which involves a total acquisition amount of $5 million, Ranhill wants the execution of a power sales agreement by YNN with Manila Electric Co. in form and substance satisfactory to Ranhill; the approval from Bank Negara Malaysia for the remittance of the money for the proposed first tranche acquisition; and for PSALM to release an original standby letter of credit.

Second tranche conditions, on the other hand, include approvals from the board of directors and stockholders of Ranhill as well as a written confirmation from PSALM on the extension of the closing date, the validity and enforceability of the asset purchase agreement, and that it has no objection to Ranhill acquiring the sale shares.

To dismiss rumors of a news blackout on the Masinloc deal, Energy Secretary Raphael Lotilla assured the public "that the deadline is still there."

"We are just waiting for the deadline to lapse and see what will happen (if Ranhill will pay or fail to come up with the down payment of Masinloc)," Lotilla said.

Lanao del Norte Rep. Alipio Badelles, who chairs the House committee on energy and the joint congressional power commission, said they will summon PSALM to report on this matter. — With Donnabelle Gatdula