Maynilad gets debt reprieve

Maynilad Water Services Inc. has secured a court reprieve yesterday on the payment of its P17.59-billion debt to creditors, giving the company enough time to map out a viable rehabilitation plan.

At the same time, the Quezon City Regional Trial Court has appointed Rosario Bernaldo, a certified public accountant and lawyer, as Maynilad’s rehabilitation receiver. She was given five days from receipt of order to manifest her acceptance or non-acceptance of her appointment.

In granting Maynilad’s request for suspension of debt payments, the Quezon City RTC said it found the petition sufficient in form and substance.

The order also effectively barred Maynilad from selling, transferring or disposing in any manner any of its properties, except in the ordinary course of business.

The RTC likewise ordered the water utility firm to pay in full all administrative expenses incurred after the issuance of the stay order.

The court has scheduled a hearing on Jan. 7, 2004 to discuss the proposed rehabilitation plan of Maynilad.

In its petition for suspension of debt payments, Maynilad said while it has total assets of P16.94 billion as of Oct. 31, 2003, it foresees the impossibility of meeting its debt payments as they respectively fall due.

Maynilad said on the basis of projected market conditions for the next nine years, it stands a good chance of recovering from its financial difficulties.

The company’s rehabilitation plan calls for the rescheduling and restructuring of its suspended and current concession fees to state regulator Metropolitan Waterworks and Sewerage System (MWSS) with interest at nine percent and the rescheduling of a big portion of its liabilities.

Maynilad is about 59 percent controlled by Benpres Holdings, the

local flagship of the Lopez family. About 20 percent is owned by Ondeo, a French multinational affiliated with Suez Lyonnaise des Eaux, and the remaining 20 percent by Lyonnaise Asia Water Ltd.

Maynilad’s corporate rehabilitation plea came a few days after an international arbitration panel ruled that the utility firm would have to maintain its 25-year water concession for the western part of Metro Manila. The panel also allowed the MWSS to draw on Maynilad’s $120-million performance bond that is primarily guaranteed by Benpres.

The panel likewise ordered Maynilad to settle about P6.77 billion in unpaid concession fees.

Benpres said the payment of the performance bond is part of the debt restructuring plan it is now working out with its creditors. It has guaranteed up to 60 percent of the performance bond.

The panel also ruled that neither Maynilad nor MWSS has grounds to terminate the concession and ordered both parties to continue from where they left off prior to the arbitration.

Maynilad has sought clarification on the terms and conditions of the continuation of the concession agreement which in their view failed to take into account the financial impact of such a decision.

In particular, Maynilad sought the arbitration panel’s guidance on the rate rebasing exercise conducted by the MWSS-Regulatory Office that has a negative effect on the economic viability of the concession.

In Dec. 2002, Maynilad filed a notice of termination of its concession agreement with the Philippine government and sought the return of at least $303 million it allegedly invested in the privatized water utility.