Business World, Â 25 October 2013
ByÂ C. H. C. Venzon
THE AQUINO administration on Friday marked the first project turnover under its signature public-private partnership (PPP) program.
The Citicore-Megawide consortium handed over “more than 500″ completed classrooms to the Education department and PPP Center, said Louie B. Ferrer, Megawide Construction Corp. chief information officer at the sidelines of a ceremony in San Jose del Monte, Bulacan.
“We are on track to complete the close to 7,200 classrooms by April next year,” Mr. Ferrer added. “The others are being simultaneously built by our around 150 subcontractors and more than 8,000 construction workers.”
The Citicore-Megawide consortium was one of the two groups that last year won the P16.42-billion PPP for School Infrastructure Project (PSIP) Phase 1, which calls for the construction of 9,300 classrooms in the Northern Luzon, Central Luzon and CALABARZON regions.
The other winning bidder was the BF Corp.-Riverbanks Development Corp. Consortium.
“We are confident that they can finish the classrooms,” PPP Center Executive Director Cosette V. Canilao said, referring to both groups.
Fridayâ€™s turnover marked progress for the governmentâ€™s flagship infrastructure program, which has been hit by continued delays and more recently investor dissatisfaction with contract terms. For one delayed project, the government has just sweetened the terms for prospective bidders.
In a bid bulletin dated Oct. 18 but uploaded on the PPP Centerâ€™s website just last Wednesday, the agency announced the following amendments for the Mactan-Cebu International Airport PPP:
â€˘ no airport shall be built within the Mactan and Cebu islands “at any time before the end of the 25th contract year or when the passenger traffic reaches 20 million passengers for three years, whichever is later”;
â€˘ no existing domestic airport shall be upgraded to international status within the 25-year concession period;
â€˘ no feasibility study, planning, or construction of a new airport shall be conducted within the concession period; and
â€˘ no hotel or car parking facilities shall be built within the 500-meter radius from the airport complex.
The changes are expected to add to the attractiveness of the P17.5-billion project, the auction for which was deferred last August after prospective investors questioned the offered contract terms. The Transportation department has already said it would extend the concession period to 25 years from 20 and shoulder the real property tax.
Pre-qualified to bid next month are the MPIC-JG Summit consortium; AAA Airport Partners of the Ayala and Aboitiz groups; the Filinvest-CAI consortium; San Miguel-Incheon Airport consortium; First Philippine Airports led by First Philippine Holdings, Inc.; the Premier Airport Group led by SM Investments Corp.; and the GMR Infrastructure and Megawide consortium.
Including the PSIP Phase 1, the government has so far awarded just four PPP deals.
The P1.96-billion Daang Hari-South Luzon expressway, bagged by Ayala Corp. in December 2011, is still under construction.
Right of way acquisition, meanwhile, is being done for the P15.8-billion Ninoy Aquino International Airport expressway project that was awarded to San Miguel Corp.-led Optimal Infrastructure Development, Inc. in May this year.
Earlier this month, two out of five contracts under the P8.8-billion PSIP-II were awarded earlier this month to Megawide and the BSP & Co. Inc.-Vicente T. Lao Construction consortium. –Â C. H. C. Venzon
10 December 2012, The Philippine Star
by Zinnia delaÂ PeĂ±a
Megawide Construction Corp. successfully raised P6.5 billion from the issuance of 10-year fixed rate corporate notes.
The company signed Friday a P6.5- billion notes facility agreement with the Philippine National Bank (PNB) and some other lenders.
Oliver Tan, chief finance officer at Megawide, said the issue was oversubscribed with orders hitting a total of P8.1 billion.
Proceeds from the notes issuance plus P2 billion in available equity will be used to fund the construction of more than 7,000 classrooms.
Megawide won two school infrastructure packages under the governmentâ€™s public-private partnership project. Under the build-lease-transfer contract, the company will build 2,885 classrooms in Region III and 4,259 in Region IV-A.
The government will make annual lease payments of P522.98 million for Region III classrooms and P760.49 million for Region IV-A classrooms for the next 10 years.
Tan said construction of the classrooms would commence this month with the completion date targeted in February 2014.
Including the school projects, Megawideâ€™s current border book is valued at approximately P26 billion as of September this year, Tan said.
This should translate to P16 billion in revenues in 2013, double its forecast for this year.
In terms of profit, Megawide expects to end next year with around P1.5 billion to P1.6 billion, 78 percent higher than the estimated P1 billion earnings this year.
â€śOur current order book are mostly office buildings and the schools, which have the fastest turnover compared with high-rise residential which normally takes three to four years to complete, the school project is like two to 2Â˝ years,â€ť Tan said.
To ensure continued growth, Tan said the company is looking to bid for in several other PPP projects like the NAIA expressway and the construction package for the Philippine Orthopedic Center.Â He said they are now in talks with prospective partners for these two large-scale infra projects.
Megawide, which is known for developing most of SM Development Corp.â€™s residential condominium projects, has been diversifying into other segments of the market to widen its investment portfolio.
Tan said the company remains optimistic on the residential segment of the market although it sees SMDCâ€™s share to its total revenues go down to 45 to 50 percent from 73 percent.
â€śThis year, we booked more office buildings and hotels than residential so that somehow softens any impact on the residential property and moving forward we are looking to book more on social infra like schools, hospitals… so that should somehow give us a more balance and diversified order book,â€ť Tan pointed out.
Megawide recently bagged a P1.6-billion contract to build One World Hotel in Fort Bonifacio, owner of the H2O Hotel in Manila Ocean Park.
It also won the contract to build Filinvest Landâ€™s iHUb Cebu worth an estimated P1.2 billion, marking the companyâ€™s first project outside Metro Manila.Â Construction is ongoing and completion is targeted in 2014.
10 December 2012, Philippine Daily Inquirer
by Doris Dumlao
The Megawide engineering and construction group has raised P6.5 billion through the sale of debt paper to partly fund a classroom-building project under the governmentâ€™s public-private partnership framework.
Citicore-Megawide Consortium Inc.â€”which was formed by listed firm Megawide Construction Corp. and its controlling shareholders to undertake a P12.83-billion school infrastructure projectâ€”sold 10-year corporate notes with a one-year grace period.
PNB Capital served as lead arranger and sole bookrunner for the corporate notes issue, while state-owned Development Bank of the Philippines and Land Bank of the Philippines were co-lead arrangers.
Unlike retail bonds, which are sold through a public offering and must go through a more tedious regulatory approval process, corporate notes are a quicker fund-raising option for top-tier corporations as they are sold to no more than 19 selected institutional investors. In this case, the note holders are Bank of Makati, Bank of the Philippine Islands, DBP, East West Bank, Land Bank, Metropolitan Bank and Trust Co., and PNB.
Although there were other PPP projects awarded before, this was the first to take off, said Philippine National Bank chairperson Flor Gozon-Tarriela.
Education Undersecretary Francis Varela said this facility was â€śground-breakingâ€ť as this was the â€śmost significant funding for social servicesâ€ť that he could remember.
â€śOur company is now ready to do its share in nation-building,â€ť said Megawide president Edgar Saavedra during the signing of the corporate loan facility on Friday. â€śMegawide is tasked with the construction of quality classrooms conducive to a healthy learning environment for our countryâ€™s future leaders.â€ť
â€śBacked by our companyâ€™s value engineering, we will build schools/classrooms that are within governmentâ€™s budget but with superior quality and at a faster pace through the use of superior technology,â€ť he said.
Oliver Tan, chief finance officer of Megawide, said the corporate notes would have a tenor of 10 years plus a one-year grace period. It will have fixed interest rates for the first five years with a repricing on the sixth. He said interest rate would be based on benchmark five-year PDSTF plus a certain spread upon drawdown by January next year. He estimated that the coupon rate would likely be within the 5.5-6 percent per year range.
Megawide earlier created the joint venture with parent firm Citicore Holdings Investment Inc. Citicore controls 90 percent of the venture while Megawide owns the remaining 10 percent, a structure intended to spread any balance sheet risk arising from this PPP project.
In August, the Megawide-Citicore consortium won the DepEdâ€™s school infrastructure PPP packages (A and B) for Region III and Region IV-A, respectively, with lease payments worth P523 million and P760 million each year for the next 10 years. These figures represent the annual lease payment to be made by DepEd to Megawide within the next 10 years in exchange for the construction of the school buildings.
09 December 2012, The Philippine Star
by Rainier Allan Ronda
The 9,300 classrooms to be built under a public-private partnership (PPP) scheme between the Department of Education (DepEd) and two joint venture consortia is expected to start construction by next month.
Education Secretary Armin Luistro said that DepEd was still in the process of bidding out the contract for the independent consultant who will approve the design and monitor and audit the classrooms to be constructed by the two winning bidders for the P16.5-billion worth of classrooms to be built under their PPP School Infrastructure Program (PSIP) within this month.
DepEd expects to award the consultancy contract before the Christmas break.
Luistro earlier estimated actual construction activities to start by November.
DepEd became the first government agency to bring an ambitious PPP proposal to a concrete infrastructure project funded by private groups when it signed a build-lease-transfer (BLT) agreement with two consortia that will build the 9,300 classrooms for public schools.
The Department of Public Works and Highways (DPHW) was supposed to be the first government agency to accomplish this with their award of the P1.96-billion Daang Hari-South Luzon Expressway (SLEx) Link road contract to the Ayala group last April, but the project has been met with delays allegedly due to redesign and cost issues.
Sites inspection conducted on October 23, 2013
The PPP for School Infrastructure Project (PSIP seeks to supplement the current initiatives and program of the Department of Education on classroom construction classroom nationwide. Â The objective of the government is to expand the supply of classrooms in all public school system as fast as it could reasonably be done and cut the current shortage of around 66,800 classroom units nationwide.
Department of Education (DepEd)
The project will involve the design, financing and construction of about 9,300 one-storey and two-storey classrooms, including furniture and fixtures, in various sites in Region I, III and IV-A. Â The project aims to supplement the current program of the Department of Education in reducing classroom backlog.
PHP 16.28 Billion Â | Â USD 397 Million
Build-Lease-and Transfer (BLT)
Status (as of November 22, 2013)
374 sub-projects (1640 classrooms) have been completed
1,094 sub-projects (3,577Â classrooms) have started construction
Notices to Proceed (NTPs) to 1,726Â sub-projects (5,961Â classrooms) issued
Draft Minimum Performance Standards and Specifications (MPSS)
Minimum Performance Standards/Specifications of the PPP for School Infrastructure Project, of the Technical Committee to serve as reference in assessing prospective designs and technologies that may be proposed for the PPP Project.
Please note that this is for consultation purposes only and NOT a solicitation to Bid.
To view and download the document, Â please visit Department of Education
website’s File and Forms SectionÂ link at DEPED PFSED Â andÂ scroll
down to access the Revised Minimum Performance Standards file.
Department of Education
MA. CZARINA AIZZA A. GALICHA
Project Monitoring Officer
Public-Private Partnership (PPP) Center
Policy Formulation, Evaluation and Monitoring Service
(+632) 990-0721 local 5203