San Miguel Corp forms new company for MRT7
MANILA, Philippines – Diversified conglomerate San Miguel Corporation (SMC) has formed SMC Mass Rail Transit 7 (MRT7) Incorporated, a P10-billion ($216.47-million) company that will hold its controlling interest in the P63-billion ($1.36-billion) MRT7 project.
Based on the incorporation papers filed with the Securities and Exchange Commission, San Miguel, through its wholly-owned infrastructure unit San Miguel Holdings Corporation (SMHC), formed SMC Mass Rail with an authorized capital stock of P10 billion ($216.47 million).
The capital stock is divided into 10 billion shares with a par value of P1 ($0.022) per share.
Of the P10 billion, at least 25% or P2.5 billion ($54.12 million) has been subscribed by SMHC and at least 25% of the total subscription worth P625 million ($13.53 million) has been paid in cash.
The primary purpose of the newly formed unit is "to engage in and carry on a development and contracting business" involving railways, railroads, intermodal transport terminals, and tollways, among others.
Last February, San Miguel said it is ready to start the construction of the MRT7, after completing the funding package of the project, 7 years after the original proposal was presented.
Universal LRT Corporation BVI Limited, the MRT7 concessionaire controlled by San Miguel, said it fully complied with the financial closure requirements of the project that would involve the construction of a 22.8-kilometer rail system from North Avenue at the corner of EDSA in Quezon City to San Jose del Monte City in Bulacan.
Financial closure refers to the process of completing all financial transactions related to the project.
San Miguel president and COO Ramon S. Ang earlier said the vital infrastructure project would serve some two million commuters in the northern parts of Quezon City and Caloocan, and the towns of Bulacan province.
The groundbreaking is expected to happen sometime this month. Based on the construction timeline submitted by contractor Hyundai Rotem-EEI consortium to the transportation department, the MRT7 will be completed by August 2019.
The construction was delayed for about 7 years, because of the proponent's failure to secure a performance undertaking from the finance department and a row over a component of the deal.
Performance undertaking refers to a guarantee from the government that it will finance the project should the proponent be incapable of funding it.
It was in October 2010 when San Miguel, through SMHC, acquired a 51% stake in the MRT7 concession, therefore holding the exclusive right, obligation, and privilege to finance, design, construct, supply, complete, and commission the MRT7 project.
The MRT7 deal was originally bagged by businessman Salvador Zamora II of ULC in 2008. But ULC was unable to secure performance undertaking, thus failing to get financial closure for the MRT7 expansion.
It was only July 23, 2014 when the finance department gave the now San Miguel-backed ULC its performance undertaking.
The MRT7 project also faced delays due to a change in the terms of the deal, which is the location of the proposed common station along EDSA.
The original 25-year MRT7 concession agreement called for the common station to be located near SM City North EDSA.
But the transportation department afterwards decided to transfer it near Ayala Land's TriNoma mall, adjacent to SM City North EDSA, saying that it will "benefit commuters more."
The MRT7 will cover 14 stations from North Avenue in Quezon City, passing through Commonwealth Avenue, Regalado Avenue, and Quirino Highway up to the proposed intermodal transportation terminal in San Jose del Monte.
The project also includes the construction of a 22-kilometer road that will connect to the North Luzon Expressway near the Bocaue exit.
ULC also plans to develop 900,000 square meters of commercial space in San Jose del Monte throughout the concession period. – with reports from Chrisee Dela Paz/Rappler.com
$1 = P46.18