Tuesday, June 25, 2013

K-Water eyes Korean Eximbank, StandardChart to fund Angat buy

Manila Bulletin 
By Myrna M. Velasco 
Published: June 25, 2013
The major lenders being tapped by Korea Water Resources Corporation (K-Water) for its $440.88 million Angat plant acquisition are the Korean Export-Import Bank (Eximbank) and Standard Chartered.
This was bared by K-Water director general for overseas business department Won-Cheol Park in an exclusive interview during his Manila sojourn to continually discuss with Philippine government the issues impeding the early turnover of the privatized Angat facility.
The K-Exim loan, it was gathered, already secured the approval of the Korean government. The imprimatur of the State was required because K-Water is a government-owned corporation.
“The acquisition will be funded with 70-percent loan and 30-percent equity. So we have K-Exim and Standard Chartered, but we are also looking at borrowing from banks in the Philippines,” Park said.

Moving headway to the settlement of the purchase price and the consequent turnover of the 218-megawatt component of the Angat hydropower facility, however, will be an uphill climb given the “five major unresolved issues” that are still being negotiated by relevant parties.
From the issuance of the certificate of effectivity (COE), the South Korean firm will be required to remit payment within the prescribed 27-day period. That will then merit the final turnover of the plant to the buyer.
The visit of Philippine Energy Secretary Carlos Jericho Petilla to the K-Water headquarters in South Korea this June 25 is expected to bring “breakthroughs” in the negotiation for the closing of the deal.
Albeit that comes with caution on the part of the Philippine government to be judicious on the concessions it will give to the asset buyer because that might tilt the playing field for the other bidders if the conditions in the Asset Purchase Agreement (APA) will be changed at this stage.
Park said “K-Water is very, very eager to get this project (Angat) closed. But we want some assurance from the Philippine government on the resolution of the issues we raised. These are not new issues, we have raised them even before.”
He stressed that the level of comfort they are asking government will be to put in paper all the agreements that will be resolved by parties, primarily on the settlement of the real property tax (RPT) arrears and the cost-sharing arrangement for the water to be utilized for electricity generation of the plant’s auxiliary units 4 and 5.
The second issue is subject to a separate negotiation with the Metropolitan Waterworks and Sewerage System (MWSS) which is the owner of the auxiliary units.
The Korean firm is also seeking reduction of its purchase offer, noting that the plant had already deteriorated since it was bid out in 2010.   source

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