DBP, LandBank set to acquire 76% of Metro Rail

Published by rudy Date posted on March 31, 2009

STATE-RUN banks are beefing up their stake in Metro Rail Transit Corp. to 76 percent by the end of the month as part of the government’s bid to take over the operation of the 17-kilometer MRT 3 along Edsa.

Finance Secretary Margarito Teves said yesterday that the decision to take over MRTC through the Development Bank of the Philippines and Land Bank of the Philippines would help the government save at least $235 million.

“This is not going to be a reverse privatization because it is only temporary,” Teves said.

“We will privatize this as quickly as possible.”

Teves said the savings from having to pay a management fee to the private operator would enable the government to expand the line and increase revenue from renting out commercial space at the train stations.

But he said the government would unload its shares in the light rail transit through a competitive bidding within the year.

“If we continue with it indefinitely, that is not in the best interest of the government,” he said.

“Our policy is to privatize this facility because we don’t want to tie up the resources of DBP and LandBank,”

DBP president and chief executive Reynaldo David said the state-owned banks were increasing their combined shareholdings in MRTC to 76 percent by the end of the month from 56 percent now, and that would increase the government’s board seats in the company to 10 from six.

David said both banks started acquiring shares in MRTC in December, when they bought 26 percent, and eventually increased that to 56 percent in February.

He said the government takeover would benefit the riding public since it intended to improve MRT 3’s operations by dispatching more trains and connecting it with LRT 1, which runs to Monumento in Caloocan City from Baclaran in Pasay City.

He said the plan to take over the rail operator was formed last year as a way of saving on interest payments, since the government had guaranteed the company’s $439-million loan.

The government would also save at least P5.7 billion in annual subsidies to keep fares low while paying the guaranteed 15- percent return on investment to shareholders, he said.

The takeover would help resolve the arbitration cases filed by MRTC in Singapore and Elliot Associates in Washington on unpaid arrears.

MRTC is majority owned by a holding company, MRT Holdings Inc., a consortium that originally consisted of property giant Ayala Land, Anglo Philippines Holding Corp., Fil-Estate Management, Ramcar of National Bookstore owner Alfredo Ramos, and Greenfield Development of the Campos family.

Over the years, some of the original shareholders divested from the holding firm and sold their shares to fund managers.

David declined to reveal details of the transaction including the acquisition price, as well as the identities of the shareholders that have divested from the consortium.

He said those details were covered by a no-disclosure agreement with the shareholders of MRTC.–Lawrence Agcaoili, Manila Standard Today

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