First Holdings assumes Benpres obligations in north tollways project

First Philippine Holdings Corp. (FPHC), the Lopez-owned holding unit for the group’s energy and infrastructure ventures, has assumed the loan guarantee obligations of its debt-plagued parent company Benpres Holdings Corp. (BHC) in their tollways project north of Manila.

In a disclosure to the Philippine Stock Exchange, FPHC and BHC, which hold stakes of 70 percent and 30 percent, respectively, in First Philippine Infrastructure Development Corp. (FPIDC), the corporate vehicle for the Manila North Tollways project, said they have signed an agreement that would modify the ownership structure of FPIDC.

The Lopez companies said such action is necessary in preparation for the initial draw of the project financing, as required by the MNTC lenders.

"Under the sponsor support agreement with MNTC lenders, Benpres, as one of the sponsors of the tollways project, is required to guarantee certain obligations of FPIDC. MNTC’s lenders agreed for FPHC to replace this Benpress guarantee with an FPHC guarantee; provided among other things, that the ownership structure is modified," the companies said.

For MNTC’s pre-operation, both FPHC and BHC have advanced amounts to FPIDC. With the change in ownership structure of FPIDC, BHC will assign to FPHC its advances to FPIDC amounting to P1.1 billion.

"The FPHC and Benpress advances to FPIDC, inclusive of the assigned advances, would eventually be converted into equity. Benpress would retain all economic rights with respect to the shares converted from the advances assigned by Benpress to FPHC," the companies disclosed.

FPIDC controls 60 percent of the MNTC project while the remaining shares are held by the Philippine National Construction Corp. (20 percent) and the Egis Group of France (20 percent).

Among the syndicate of lenders for the $500-million tollways project are the Asian Development Bank, International Finance Corp., Australia’s Export Finance and Insurance Corp. and Coface.