BDO readies SMC financial war chest for NAIA

MANILA, Philippines — The country’s largest bank is preparing the financing package that will fund the P122.3-billion rehabilitation of the Ninoy Aquino International Airport (NAIA), with San Miguel Corp. (SMC) just weeks away from signing the concession for the project on March 18.

BDO Capital & Investment Corp., the investment arm of Sy-led BDO Unibank Inc., will extend the loan that SMC SAP & Co. Consortium will need to operate and maintain the NAIA.

BDO Capital president Eduardo Francisco said the investment house has evaluated the financial proposal of the group and concluded that it would work despite initial worries from some quarters.

“We are arranging financing for all of their needs. We reviewed financial projections, capabilities and management plans, and also analyzed strengths of the various shareholders,” Francisco told The STAR.

Francisco said Department of Transportation (DOTr) officials called him the night before the award of the concession to SMC SAP & Co. Consortium. BDO Capital was asked to look into the financial bid made by the group offering the government a revenue share of 82.16 percent.

Upon reviewing the details, Francisco told the transport officials that BDO Capital was ready to lend the consortium the funding it would require.

Based on latest figures, BDO is the largest bank in the country with an asset size of P4.11 trillion, ahead by roughly P1 trillion of the next biggest, Land Bank of the Philippines.

BDO Capital underwrites the fundraising activities of some of the largest conglomerates, raising a total of P3.81 trillion for its clients between 2020 and 2022.

Some analysts and groups expressed concerns over the viability of SMC SAP & Co. Consortium’s offer to remit 82.16 percent of revenues from NAIA operations to the government.

Fitch Group unit CreditSights expects the SMC-led group to incur negative earnings before interest, taxes, depreciation and amortization from the project.

Further, the consortium will pay an upfront fee of P30 billion and an annuity cost of P2 billion to the government on top of the revenue share. The group will also shell out at least P122.3 billion to execute the rehabilitation and upgrade of NAIA.

The consortium may recover investments on the project from the collection of passenger service charges (PSC), which fall outside the coverage of revenues to be shared with the government.

The Manila International Airport Authority (MIAA) plans to adjust the PSC to P390 from P200 for domestic flights, and to P950 from P550 for foreign trips in the first year of the private takeover.

However, Public-Private Partnership Center deputy executive director Jeffrey Manalo said SMC can propose adjustments in the PSC, but MIAA will retain the fare-setting power.