MWSS mulls add’l $230-M borrowing to pay obligations

With no money forthcoming from the Lopez-owned Maynilad Water Services, the Manila Waterworks and Sewerage System (MWSS) plans to borrow another $230 million to refinance its maturing obligations next year.

Finance sources revealed yesterday that the MWSS is seeking the approval of the Department of Finance (DOF) for its $230-million borrowing next year. This is on top of the $200-million authority that it already got for this year.

The MWSS has been struggling to refinance its maturing obligations as Maynilad has stopped payments on its monthly franchise fee which includes payments for the obligations that it assumed from the MWSS when it won the franchise.

MWSS needs another $230 million for the rest of its maturing obligations next year.

MWSS just completed an $85-million borrowing underwritten by the First Metro Investment Corp., the investment arm of the Metrobank Group.

According to sources, the $85-million deal completed this month was the third of four borrowings that the MWSS had to undertake to complete its $200-million authority.

The source said MWSS is also in the process of closing the deal on the last $15-million borrowing, this time underwritten by RCBC Capital. This final borrowing would be the last of the $200-million borrowing authority.

Early in the year, the MWSS secured a $10-million loan from Keppel and another $105-million bridge financing from Deutsche Bank.

The source said that MWSS has already secured an authority for next year’s $230-million borrowing, but this has to be cleared by the DOF since it will carry a sovereign guarantee.

Once approved by the DOF, it will be approved by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) and the MWSS can start receiving proposals from arrangers and underwriters.

MWSS was set to demand payment from Maynilad, but the courts granted the company a temporary debt relief which forces MWSS to go to the credit market itself in order to refinance its obligations.

The recently-concluded $85-million bond offer involved the issuance of sovereign-guaranteed bonds.

MWSS financial manager Estrelito Polloso told reporters earlier that the government did not really need to refinance the obligations had Maynilad paid its monthly amortization. But the Lopez-controlled company had stopped making payments since March 2001.

Since it stopped payments, Maynilad had accumulated some P7 billion worth of monthly payments to service MWSS loans that it had agreed to assume when it made the bid for its existing water service franchise.