MANILA, Philippines—State-owned Power Sector Assets and Liabilities Management Corp. (PSALM) plans to tap a P25-billion short-term loan facility within the first quarter, to service the maturing obligations of cash-strapped National Power Corp.
PSALM president and chief executive officer Emmanuel R. Ledesma Jr. told the Inquirer that the PSALM board had approved the proposed loan facility to be provided by Land Bank of the Philippines, after opting to postpone another fundraising activity that was supposed to be conducted this year.
“In the last PSALM board meeting held in mid-December, the board deferred action on the proposed P50-billion bond issuance,” Ledesma said.
According to Ledesma, PSALM is now awaiting approval from concerned government authorities for the planned borrowing.
“Once approved by the Monetary Board, which PSALM targets to get this month, we will immediately tap the short-term loan with LandBank, which is payable in one year (and which has) an option to convert into a seven-year term loan,” he explained.
Proceeds from the fund-raising activity would help service Napocor’s maturing obligations amounting to $1.2 billion. These include a $200-million bond issue that will mature in March this year and $400 million worth of floating-rate notes due in August next year, Ledesma earlier said.
As of end-2009, Napocor’s total liabilities stood at $16.5 billion. PSALM, which was created in 2001, has been tasked not only to handle the privatization of Napocor’s generation assets and contracted capacities, but also to clean up the power firm’s debts.
Last year, PSALM said it was planning to issue peso-denominated bonds in the first quarter of 2011 to raise as much as $2 billion.
The company’s present liability management program allowed it to either tap the local capital market or engage in dollar financing to settle these obligations. Tapping the credit market has become very likely as the government has slowed down the privatization of the remaining energy assets.
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