Debt relief deal lends Megawide unit more leeway

The airport infrastructure arm of Megawide Construction Corp. expects to free up about P4.5 billion in cash in the next three years following a recent deal with creditors to restructure about P23.9 billion in debt incurred to modernize Mactan Cebu International Airport (MCIA).

The projected cash flow impact of the debt restructuring of GMR Megawide Cebu Airports Corp. (GMCAC) is 25-percent larger than the earlier estimate of P3.6 billion when the new agreement with creditors was announced.

The amount of P3.6 billion indicated in the initial announcement covered the peso component, which was then revised to P4.5 billion to include the dollar component, Megawide said in a disclosure to the Philippine Stock Exchange on Monday.

GMCAC recently entered into an agreement with creditors for the rebalancing of its debt servicing commitments and relaxation of debt covenants associated with the contract to develop, operate and maintain MCIA. The P23.9 billion represented its outstanding debt as of end-2020.

The lenders are BDO Unibank Inc., Philippine National Bank, Bank of the Philippine Islands, Development Bank of the Philippines, Land Bank of the Philippines, Metropolitan Bank and Trust Company as well as the Asian Development Bank. BDO Capital also acted as the financial advisor.

Based on the final terms of agreement executed by both parties, the exercise will temporarily free up about P4.5 billion in cash from 2021 to 2023, which can be utilized to support operations while the ongoing pandemic limits air travel.

Principal payments will be postponed to 2027 up to 2029, when the travel industry is expected to have fully recuperated from the ill effects of COVID-19, based on the renewed omnibus loan and security agreement.

The amount to be freed up represents the amount of principal debt falling due from December 2021 to December 2023 as well as interest payments from September 2020 to December 2021.

“From the very start, our lenders were very accommodating and have been observing the true spirit of Bayanihan. They have genuinely exercised their sworn mandate to act as intermediaries between sources and users of capital, as they have collectively consented to our requests on all occasions,” said Ramon Diaz, Megawide group chief financial officer. INQ