SMC, K-Water forge Angat JV

Manila Bulletin 
By Myrna M. Velasco 
Published: August 29, 2013 
To prepare for the long-delayed closing of the $440.88 million Angat hydropower facility privatization deal, winning bidder Korea Water Resources Corporation (K-Water) has finally inked an agreement with San Miguel Corporation (SMC) last week to firm up their partnership.
The tie-up pact, which was cemented via a memorandum of agreement (MOA), had been signed August 23, according to sources privy to the matter.
Nevertheless, relevant parties disclosed that some “outstanding issues” are still being “continuously resolved,” including the $26-million premium that San Miguel must pay and the formation of the joint venture vehicle for the Angat acquisition.
The finalized MOA between SMC and K-Water had ditched chances for Manila Electric Company (Meralco) to re-open negotiations for any prospective joint venture deal for Angat; unless, SMC will bolt out in the future.
K-Water, for its part, is bent on closing the transaction with PSALM even without firming up all the details yet with its partner – and that it will do so without conditions as laid down by Energy Secretary Carlos Jericho Petilla in his June visit to the Korean firm’s headquarters in Daejeon.
In a related development, PSALM President Emmanuel R. Ledesma Jr, indicated that “K-Water already sent a letter-request” for the issuance of certificate of effectivity (COE) to finally bring the Angat plant’s privatization to successful conclusion.
“The COE will definitely be issued on September 2,” an elated Ledesma has stressed. The initial date agreed by parties was August 23, but K-Water asked for additional leeway so it can seal its partnership negotiations first with San Miguel.
After the effectivity notice had been served, K-Water will have 27 days to remit its payment for the plant, which in turn will merit the asset’s final turnover to the winning bidder.
Standard Chartered Bank has been tapped as the transaction’s financial advisor. About 70-percent of the financing for acquisition will be sourced from loans, with the involvement of several local banks. A significant portion though, according to K-Water, will be provided by Korea Export-Import Bank.
After the facility’s turnover, K-Water will assess the needed rehabilitation at the Angat plant. It will also hammer out an arrangement with PSALM and the Department of Finance (DOF) on the payment of residual real property tax (RPT) amounting to P330 million.   source