PNOC-EDC set to pick lead arranger for $100-M priv

The PNOC-Energy Development Corp. (EDC), the geothermal unit of the state-owned Philippine National Oil Co., will choose today the lead arranger for its planned $100-million private placement this year.

Energy Secretary Vincent S. Perez said they have shortlisted three foreign investment banks from the 11 that have submitted proposals.

These are: Lehman Brothers, JP Morgan Chase Manhattan and Bank of Tokyo Mitsubishi. The eight other banks that submitted proposals are Citibank, HSBC, ING Bank, ABN-AMRO, Deutsche Bank, Credit Suisse First Boston, Fuji Bank, Standard Chartered and Bear Stearns.

"We will come up with the lead arranger by Monday (today) for our $100-million, five-year private placement," he said.

Proceeds from the loan will be used to finance some of the company’s capital expenditure and to partly refinance its loans from Citibank amounting to $150 million which is set to mature this December. Some $70 million of the $150 million was paid in 1996.

PNOC-EDC issued in June 1996 $150 million worth of Eurobonds to partially finance investment and capital costs for its ongoing geothermal projects, namely, Mindanao 2 Geothermal project, Mt. Labo Geothermal Project and Northern Negros Geothermal Project. The Eurobond was issued at a coupon rate of 8 1/8 percent per annum with a tenor of five years and bullet payment on maturity on December 6, 2001.

Defaulting on the $150-million maturing loan could lead to some serious problems for Napocor. For instance, it would trigger cost-default of existing multilateral and bilateral loans collectively amounting to $785 million.

A default would also result to a possible calls for buyout by the company’s build-operate-transfer contracts for PNOC-EDC power plants amounting to $924 million. Another possible effect of loan default would be increased difficulty for PNOC-EDC in securing future loans to support its continued operations and payments to BOT contracts already in place. – Donnabelle Gatdula