Maynilad bidding likely to be reset

The Special Bids and Awards Committee (SBAC) of the Metropolitan Waterworks & Sewerage System (MWSS) may reset the bidding for the government’s 83.97-percent stake in Maynilad Water Services Inc. to allow prospective buyers to conduct a thorough due diligence study on the cash-strapped utility firm.

Oscar Garcia, head of the MWSS-SBAC, said three of the four qualified bidders have requested that the auction be moved to a later date due to the delay in the procurement of certain documents that are vital to their preparation for the bidding.

The three include the tandem of Metro Pacific Corp. and the Consunji family’s DM Consunji Inc.; a group led by Ayala-owned Manila Water Co. Inc. and partners JW International and BPI Capital Corp.; and Karunakaran Ramchand of India. They expected to get the documents Sept. 6 but only got them two weeks later.

The remaining bidder is the consortium of Rubia Holdings-Noonday Asset Management Asia Pte. Ltd. of Singapore.

Garcia said the SBAC will act on the bidders’ request and other issues today.

The submission of technical and financial bid proposals was earlier set Oct. 24 while the opening of the sealed envelopes is scheduled on Nov. 10. The notice of award to the winning bidder, on the other hand, has been set on Nov. 14.

Bidders were given until Oct. 20 to conduct due diligence.

Other issues that were raised during the pre-bid conference held yesterday were the difficulty in forecasting cashflows and whether French utilities group Suez SA would sell out its stake in Maynilad or not.

With the government disposing of its shareholdings in Maynilad, Suez is studying its options with respect to its 16-percent stake in the water utility firm.

"We are crafting a put-option with respect to that," said government corporate counsel Agnes Devanadera.

The government has set a minimum bid price of $56.4 million for its nearly 84-percent stake in Maynilad.The amount is on top of the $30-million performance bond and the $2.5-million bid guarantee required on bidders that passed the technical and business criteria.

ABN-AMRO is the financial advisor of the government in the privatization of its shares in Maynilad.

Under the term of reference approved by the board of directors of Maynilad, the winning bidder will take over and continue operations of Metro Manila’s west zone for the remaining years of the 25-year concession.

The winning bidder will also assume Maynilad’s obligations under a "debt and capital restructuring agreement" with the MWSS.

Maynilad submitted itself to court rehabilitation and ceded control of the franchise to MWSS following its failure to pay fees and other dues to the water regulatory agency. It blamed its financial woes on the financial crisis that battered Asia in 1997.