SMC teams up with Star Tollways for SCTEX bidding

MANILA, Philippines - Diversifying food and beverage conglomerate San Miguel Corp. has teamed up with Star Tollways Corp. to bid for the P27-billion Subic-Clark Tarlac Expressway (SCTEX), the country’s longest expressway.

San Miguel and Star Tollways have formed a new company, Northlink Toll Management Inc., to serve as their corporate vehicle for the proposed project. The new firm, which applied for business registration with the Securities and Exchange Commission, has an initial authorized capital stock of P1 million, divided into one million shares with a par value of P1 apiece.

San Miguel subscribed to 150,000 shares of Northlink while Star Tollways subscribed to 100,000 shares.

Documents filed with the SEC show that Northlink shall engage in and carry on the management, operation and or maintenance of the SCTEX project including periodic maintenance works, special/major/ emergency works, and all other additional works.

San Miguel and Star Tollways were two of the six companies that bought bid documents and attended the pre-bid conference last Nov. 10.

The other four companies that expressed interest to manage and operate the SCTEX include Metro Pacific Tollways Development Corp., the Citra Group, Amicus Holdings Inc., and IL&FS Transportation Networks Ltd.

This bidding is expected to revive the rivalry between San Miguel and Metro Pacific which earlier found themselves in a fierce battle for control of power utility giant Manila Electric Co. and eventually, copper-gold producer Philex Mining Corp.

San Miguel Corp. has marked its entry into the infrastructure sector by acquiring a 35-percent stake in the Private Infrastructure Development Corp. that will build the 88-kilometer Tarlac-Pangasinan-La Union expressway project through its subsidiary Rapid Thoroughfares Inc. Infrastructure Leasing & Financial Services Limited (IL&FS) is one of India’s leading infrastructure development and finance companies.

Under the SCTEX privatization program, the winning bidder will enter into a lease or concession agreement with the Bases Conversion Development Authority to operate the SCTEX on “as is, where is,” basis for a period of 33 and a half years from April 28, 2010 to Oct. 30, 2043.

The winning bidder will be responsible for the operational funding requirements in running the SCTEX, including periodic maintenance and emergency works, which will be covered by a performance security.

The private sector partner shall also arrange for the insurance of the toll road. BCDA will receive a semi-annual lease/concession fee from the winning bidder, amounting to either: the peso equivalent of yen-dominated JBIC/JICA loan debt servicing as well as all financing charges payable to BCDA 10 days prior to its due dates secured by a rolling five-year letter of credit; or 20 percent of audited gross revenues whichever is higher.

SCTEx, the BCDA’s biggest and most ambitious project to date, is a major infrastructure envisioned to serve as a backbone of development in the Central Luzon region.

The 93.77-kilometer, four-lane highway transverses Bataan, Pampanga and Tarlac and provides a direct link between Subic Bay

Freeport Zone, Clark Freeport Zone and Tarlac City.

The SCTEX was designed to make it easier for businesses to transport equipment and make their way from the various points in Subic to the various cities in Central Luzon.