Int'l banks ink $375-M loan for San Lorenzo power plant

A major German financial institution and 10 international commercial banks have signed a $375-million (approximately P15 billion) financial package for the 500-megawatt (MW) San Lorenzo gas-fired power plant in Batangas.

The lead arranger is the Kreditanstalt fur Weiderafbau (KfW), Germany's largest development bank. The 10 commercial banks are: ABM AMRO Bank NV, Bayerische Landesbank Hydo-und Vereinsbank AG, Bayerische Landesbank, Citibank NA, Credit Lyonnais, The Dai-Ichi Kangyo Bank Ltd., DG Bank Deutsche Genossenschafts AG, KBC Bank NV, The Bank of Tokyo Mitsubishi Ltd. and Westdeutsche Landesbank Gozorentrale.

JP Morgan is the financial advisor of FGP Corp.

According to First Gas Holdings Corp. vice president Francis Giles B. Puno, the total project cost is actually $500-million composed of the $375-million package and $125 million in internally-generated funds.

First Gas Holdings Corp. a subsidiary of the Lopez-run First Philippines Holdings Corp. (FPCH). Under First Gas Holdings is FGP Inc. operator of the San Lorenzo power plant. FGP is a joint venture between FPHC and BG (British Gas) Energy Holdings Ltd.

The $375-million financial package is broken down into four components.

First, a 14-year loan facility amounting the $133.297 million which has a comprehensive insurance coverage under Hermes (Hermes Kreditverischerungs AG). Some 60 percent of the facility will be underwritten by KfW and the remaining 40 percent by the commercial banks.

The second component is a 16-year $77-million loan with political risks cover from the German government provided under the Bundesgarantie fur Kapitalanlagen in Ausland (GKA) insurance program.

"KfW will fully underwrite this package although it is the first time that a GKA insurance program was undertaken for an Asian power project," Puno pointed out.

A 14-year $115-million term loan with political risk cover from the Export Credits Guarantee Department (ECGD) is the third component.

The fourth component is a seven-year $50-million facility called a working capital and revolving credit facility.

FGP officials said the $50-million facility will be used for setting up the operation facilities from the power plant to the Manila Electric Corp. (Meralco) station, and for the fuel supply contract with Enron Corp.