CEBU CITY – Megawide Construction Corp.’s airport subsidiary GMR-Megawide Cebu Airport Corporation (GMCAC) on Tuesday announced it will save PHP4.5 billion in cash in the next three years to sustain the operations of the Mactan-Cebu International Airport (MCIA) while regular travel remains contained due to the pandemic.
In a statement, Megawide said it has completed a debt rebalancing deal with its lenders, which expressed their confidence in the aviation industry’s business recovery.
The cash was initially earmarked to pay GMCAC’s PHP23.9-billion debt used to develop, operate, and maintain the country’s second-biggest airport.
Megawide said the debt rebalancing program agreed with its lenders, involves the relaxation of original debt servicing and covenant commitments, clearing the airport operator’s “runway for full recovery.”
In turn, the amount will be amortized throughout the life of the loan, with the bulk of GMCAC’s debt payments scheduled towards 2027 to 2029.
Aside from the lenders, BDO Capital and Investment Corp., which acted as the financial advisor for the transaction, played an instrumental role in assuring the company’s creditors of the long-term, mutually beneficial advantages that can be realized from the agreement.
“Assessing the current situation, multi-sectoral cooperation will be very crucial for the country’s economic take-off once smoke from this pandemic clears. The support of financial institutions, both local and regional, to private companies is important to reflect confidence in their business models and the entire country’s economic growth potential,” BDO Capital president Eduardo Francisco said.
During the negotiations, BDO Capital, with the support of all parties, developed a mutually acceptable proposition to amend the original schedule of the 15-year, PHP23.9-billion project financing for the GMCAC’s 25-year concession agreement to develop, operate, and maintain MCIA.
“For us, facilitating this transaction will help our long-time partner, Megawide and its airport subsidiary, recover from the ill effects of the crisis. Under the stewardship of Megawide, we have seen how MCIA improved and expanded over the last six years pre-pandemic, to become one of the country’s and world’s best airports,” Francisco said.
He said this track-record makes them “very optimistic” of the airport’s growth trajectory as soon as normalcy returns to the Philippines’ travel and tourism industry.
For the lenders, this will also open up fresh opportunities for expanding relationships, considering the company’s aggressive and exciting expansion plans for the country’s second-busiest air hub, Francisco added.
Megawide recorded its highest construction contracts at PHP68.4 billion in 2020 amid the pandemic, including the PHP26-billion Suncity West Side City to be completed in two and half years and the Malolos-Clark Railway Project Package 1.
The infrastructure giant has also been aggressively pursuing and confident in securing deals under major infrastructure projects, like the Metro Manila Subway System and North-South Commuter Railway Project-South Line, which are scheduled for bidding this year.
The company is currently laying the groundworks for the redevelopment of the Carbon Market in Cebu under a 50-year joint-venture agreement with Cebu City and is in active discussions with the Baguio City government for a potential landport location.
“All these developments provide Megawide, as well as its financial and business partners, with a pipeline of exciting and attractive growth prospects and value-creation initiatives moving forward,” Megawide said. (PNA)