Megawide gets payment extension from banks that funded Cebu airport

MANILA, Philippines — A unit of Megawide Construction Corp. that operates airports secured payment delays on its existing bank loans in anticipation of persistent travel weakness brought by pandemic restrictions and cuts through its bottom-line.

From the original schedule of between 2021 and 2023, principal payments for Megawide’s P23.9-billion debt got pushed back to 2027-2029 when travel is estimated to post a “full recovery,” the company said in a disclosure to the stock exchange on Monday.

The delays were granted to Megawide Cebu Airports Corp., a subsidiary that operates the Mactan-Cebu International Airport (MCIA), which spent the loan proceeds to cover the airport's building and operating costs. With scheduled payments postponed, Megawide said P4.5 billion in cash originally tied up to pay the obligations will get freed up for other purposes.

The company did not say where it will divert the freshly-released funding, but similar with other firms that have exposure to the travel industry, Megawide’s MCIA had been hit by travel prohibitions local and foreign governments imposed to stem the spread of coronavirus disease-2019 (COVID-19). 

Currently, Cebu is under the loosest quarantine regime that keeps its ports open to visitors, except those travelling for leisure from Greater Manila area where lockdowns have been reinforced. That said, tourism has still struggled to bounce back as some form of restrictions like curfews have remained in place.

These prohibitions has affected not only MCIA’s operations but as an extension, Megawide’s bottom-line. The listed engineering and infrastructure firm incurred a net loss of P389.02 million last year, a reversal of its P859.49-million profits in 2019. 

“The agreement is a strong sign of support and confidence in Megawide’s airport business model. The more relaxed debt servicing schedule will provide our airport operations a clearer runway to full recovery once the situation normalizes,” Edgar Saavedra, president and chief executive, was quoted as saying in a statement. 

Megawide availed of the loans from BDO Unibank Inc., Philippine National Bank, Bank of the Philippine Islands, Metropolitan Bank and Trust Co., multilateral lender Asian Development Bank and government-run institutions, Development Bank of the Philippines  and Land Bank of the Philippines.

The deal was needed since last year, state-mandated debt moratoriums that ran from June to December already expired and was no longer extended.

Shares in Megawide closed down 1.05% at P6.62 each to open the trading week on Monday.