UEM Mara Philippines Corp.—the operator of the Cavite Toll Expressway Project (Cavitex)—is confident that its continuing development of the road would lead to higher traffic volumes and revenues, allowing the company to meet financial obligations amounting to billions of pesos.
UEM said it recently reopened the new Zapote interchange on Cavitex, also commonly known as the Coastal Road, which would allow more cars to pass through the highway unimpeded.
“The completion of the redesigned interchange was delayed by a few months mainly because of continuous rainfall soon after [the extension to Kawit, Cavite] opened to the public last May,” the company said.
“The company has since adjusted its expected time line for the ramp-up in traffic on both the existing portion as well as the extension segment of Coastal Road and now expects traffic volume to get back on track to its forecasted levels by 2012,” UEM said.
UEM was referring to the recently opened extension to Coastal Road from Zapote to Kawit, Cavite.
In a ratings report last August, global debt watcher Moody’s Investor Service noted that 9,000-10,000 vehicles/day that used the toll road from May to July was much lower than the original forecast of 47,000 vehicles a day.
Earlier this week, Moody’s downgraded its rating for the UEM bonds to Caa1 from B2. “The ratings downgrade reflects Moody’s concern that a substantial increase in traffic volume over the next six to twelve months is unlikely, and this will materially impact MCTR’s cash flow generation and liquidity.”
Likewise, the traffic volume of the original section from Roxas Boulevard to Zapote, Las Piñas, was 2-4 percent lower than the same period last year.
The lower revenues threaten to affect $160 million worth of bonds UEM issued in 2010 through a special purpose vehicle to fund the construction of the project.
UEM said it now maintains a reserve of about $25 million to cover 12 months of interest payments. It added that its financial condition remained stable.
Last year, the company earned a profit of P276 million after interest payments and taxes. Total equity reached P2.8 billion.
The firm said it had also hired former Aboitiz group executive Andrew Deyto to serve as deputy general manager. Aldo Barrios, also a former Aboitiz group official, also joined UEM as the road’s operations manager.