DOF, BSP okay $400-M Napocor bridge financing

The Department of Finance (DOF) and the Bangko Sentral ng Pilipinas (BSP) have approved in principle a plan to borrow $400 million in bridge financing scheme for the National Power Corp. (Napocor).

Napocor acting president Roland S. Quilala said they would use the proceeds as working capital for the remaining months of the year.

Napocor said earlier its plans to tap Citibank N.A. as lead manager for a $400-million bridge financing.

But it was learned that Citibank, along with four other investment banks, Salomon Smith Barney Hong Kong Ltd., Credit Lyonnais, Standard Chartered Bank and Sumitomo Bank, have expressed apprehension that they could raise only $250 million from the planned $400 million. "According to them, they could raise a minimum of $250 million and will try their best to raise the $400 million," he said.

Apparently, the four banks are having difficulty convincing investors due to the peace and order situation in the country. "But they have assured that they can provide a minimum of $250 million," Quilala said, adding that this will not be sufficient to finance its capital requirement for the rest of the year.

He noted that the bridge financing is necessary while they are waiting for the proceeds of the company’s planned $750-million bond offering scheduled in the middle of November.

Napocor and or the Power Sector Assets and Liabilities Management (PSALM) will issue a combination of long-term dollar ($500 million) and yen-denominated bonds ($250 million). Both borrowings will be partially guaranteed by the Asian Development Bank (ADB). PSALM, under the new Power Bill, will handle all the assets and liabilities of Napocor.

For 2002, Napocor will need a total of $1.85 billion to finance its expenses. It was able to piggy back some $750 million from the National Government through the Department of Finance (DOF) in the first quarter.

The power firm will need another $750 million for capital expenditures plus an additional $350 million to cover additional revenue loss brought about by the reduction of its PPA to only 40 centavos per kilowatthour as ordered by President Arroyo in July this year.