$350-M facility for big ticket projects okayed

The Philippine Export Import Bank (PhilEximbank) has approved the creation of a $350-million global medium term note facility to be funded by the Overseas Private Investment Corp. (OPIC) of the US for big-ticket projects of government-owned corporations and private companies.

PhilEximbank president Joel Valdez said four major projects have been approved to tap the facility. More projects would be lined up when OPIC approves the subsequent allocations, he added.

"The initial amount for the facility is $250 to $350 million but that’s only a seed fund," Valdez said, adding "there will be additional funding eventually, when this initial amount is used up."

Valdez said the funds will come from the US capital market with a guarantee from OPIC which will shoulder the risk of its Philippine investment. The Phileximbank, in turn, will shoulder the credit risk of the individual borrowers of the fund.

Valdez explained that the facility would provide long-tenor funding for investment-grade (triple-A) projects and investments with no commitment fees to the borrowers. "The tenor has been stretched to 10 to 15 years," he said.

According to Valdez, the facility will be used to guarantee $200 million worth of loans for the $300-million solar wafer cells manufacturing project of SunPower Philippines Manufacturing Ltd., an affiliate of the US-based SunPower Corp.

Also approved was the $120-million project of the Gokongwei-owned Digitel Corp for the capital expenditure requirement of its cellular telephone project, Sun Cellular.

Valdez also revealed that the facility would be used to guarantee a big-ticket agribusiness venture of the Davao-based AJMR Holdings which exports bananas to Japan and China.

Finally, Valdez said $30 million would go to the Bureau of Customs (BOC) which had lined up the purchase of six X-ray machines for its customs examination facilities in key points-of-entry.

Of the first four projects qualified for loan guarantee, the SunPower project was the first to be approved, to be funded out of 25 percent equity and 75 percent loans which would be guaranteed by the PhilEximbank.

The government itself is not allowed to extend any more sovereign guarantees on private projects but PhilEximbank’s loan guarantee facility also carries the full faith and credit of the sovereign.

If the proponent defaults on its loan and PhilEximbank is itself unable to meet its guarantee obligations, the government would assume the guarantee and shoulder the consequences of loan default.

Sunpower is the world‚s biggest manufacturer of ultra high-efficiency silicon solar cells and Camacho said the company chose the Philippines as the location for its new P2.256-billion solar wafer cell plant.

Sunpower Corp. is majority controlled by Cypress Semiconductor Corp., a major manufacturer of pure optical and optoelectronic equipment. It is also involved in the design and manufacture of solutions targeted across wireless and wireline communications.

SunPower’s solar wafer plant is expected to generate employment for 760 highly-skilled Filipinos when its manufacturing facility begins commercial production of solar wafer which would be exported mainly to the US.

SPML’s application as a new export enterprise was approved by the PEZA on April 22, 2003. As a PEZA-registered export enterprise, SPML would be entitled to such incentives as income tax holiday and duty-free importation of capital equipment.