MANILA, Philippines – Megawide Construction Corp. is arranging a financing deal with Standard Chartered bank for the construction of almost 10,000 classrooms nationwide.
The listed contractor will tap the British lender’s innovative loan structure to manage risks and exposure in the Public-Private Partnership (PPP) for School Infrastructure Project (PSIP).
Megawide chief financial officer Oliver Tan said the company is in talks with Standard Chartered bank for a loan whose amount has yet to be finalized.
“Whatever structure they offered to BF Group,” Tan said. Megawide plans to monetize its long-term receivables to maintain a respectable debt ratio.
In November, BF Group of businessman Bayani Fernando agreed to buy a portion of the contractor’s P3.44 billion in receivables.
It ensured that BF Group’s debt ratios will remain low enough to venture into other projects. In 2012, BF Group won the build-lease-transfer contract for PSIP Phase 1, with the Department of Education (DepEd) committing to P344.6 million in lease payments for the new classrooms for the next 10 years.
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For its part, Megawide earlier won two school infrastructure projects involving the construction of 7,144 classrooms in Central and Southern Luzon.
“The total contract is around P12.1 billion for 10 years for Phase 1. For Phase 2, the contract is P2.2 billion,” Tan said.
The DepEd earlier signed a build-transfer deal with representatives of Megawide, and the BSP and Co. Inc. and Vicente Lao Construction joint venture, the winning bidders for the PSIP Phase 2.
The construction of more than 7,000 classrooms under PSIP Phase 1 will be completed in April with annual lease payments to follow.
“We already value engineered the structure,” Tan said.
DepEd is tapping private contractors to help close the gap of 66,800 classrooms nationwide.
Aside from PSIP, Megawide also bagged the 25-year construction, maintenance and operation contract for the P5.7-billion new Philippine Orthopedic Center. It is also the frontrunner to bag the P17.5-billion Mactan-Cebu International Airport project.
For this year, Megawide projects to post a net income of P1.2 billion and P11 billion in revenues mainly driven by the construction of high-rise residential buildings. In 2012, Megawide recorded P1 billion in earnings and P8 billion in revenues.
