Four banks set up $55-M loan facility for utilities firm

Four major commercial banks have formed a loan syndicate recently to develop a $55-million medium-term loan facility (approximately P2.2-billion), for utilities firm Manila Water Co. (MWC). The four local financial institutions are Banco de Oro Universal Bank, Global Business Bank (Global Bank), Rizal Commercial Banking Corp. (RCBC) and China Trust (Phils.) Commercial Bank.

Serving as trustee bank and agent bank for the lenders is the RCBC trust & investments division while the Banco de Oro Univeral Bank is the lead bank.

The loan will be used to finance the general corporate funding requirement relative to the rehabilitation of the Metropolitan Waterworks and Sewerage System (MWSS) water, sewerage and sanitation systems in the east zone service area managed by MWC.

Due to the company's solid financial and operating performance, it was able to secure the loan notwithstanding the improving but still generally weak market conditions in Asia. The facility was obtained without any shareholder guaranty or support in recognition of MWC's outstanding performance in a short period of time and good future prospects.

Given the solid reputation and track record of the shareholder group, this loan also demonstrated that FCDU banks can be a reliable source of medium scale loan term non recourse financing.

Two years after the MWSS turned over the operation of the east zone to MWC, the company has already realized two important milestones, namely, the reduction of non-revenue water from a high of 55 percent at turnover date ot its present level of 37 percent, and the supply of water to connected customers from an average of 12 hours a day to more than 16 hours a day at present.

The company supplies water to 340,000 customers spread across 22 cities and municipalities. The east zone cover 1,400 square kilometers of land area.

The major stockholder of MWC is Ayala Corp. with United Utilities of the United Kingdom, Bechtel Enterprises of the United States, Mitsubishi Corp. of Japan, and BPI Capital Corp. as partners.

Ayala Corp. is the Philippines' oldest business house and is recognized as the country's premier blue chip conglomerate, holding a diversified portfolio of strategic businesses including banking, real estate, infrastructure development, electronics, insurance, telecommunications, transportation, and food.

The recent merger of its banking subsidiary, Bank of the Philippine Islands (BPI), with Far East Bank and Trust Co. (FEBTC) creates the biggest bank in the country with a leadership position in all core businesses.

Its real estate subsidiary, Ayala Land, is a major developer and the largest landowner in Makati and has the widest experience of any local company in operating water supply and wastewater treatment systems, through its own real estate development programs throughout the Philippines.