IFC to join EPCIB merger

IFC to join EPCIB merger
By Jenniffer B. Austria
January 9, 2006
Manila Standard Today
http://www.manilastandardtoday.com/?page=business01_jan09_2006

International Finance Corp., the investment arm of the World Bank, may participate as an investor in the possible merger of Banco de Oro and Equitable PCI Bank.

Vipul Bhagat, IFC country manager for the Philippines, told reporters that it was possible for IFC to put in an additional equity in the merged bank, depending on the final terms and conditions of the merger.

IFC sits as an independent observer in the BdO board but has an option to convert a $20 million loan into an equivalent number of shares in the bank after two years.

If IFC opts for conversion, it will get one board seat equivalent to a 7 to 10 percent ownership in BDO.

BdO, the banking flagship of retail magnate Henry Sy, said on Friday it offered a merger with EPCI Bank by way of a share swap.

BdO, which called the offer a “merger of equals” with BdO as the surviving entity, said it was offering 1.6 of its shares for every Equitable share, valid until Jan. 31.

BdO president and chief executive officer Nestor Tan said the merger plan would depend on the response of Social Security System and the Government Service Insurance System, which both control a combined 40 percent of EPCI Bank.

IFC, meanwhile, plans to lend $50 million (P2.6 billion) for the much-delayed upgrade of the South Luzon Expressway (Slex) project.

Bhagat told reporters that IFC was in talks with Philippine National Construction Corp. and Toll Regulatory Board for the possible funding.

IFC plans to extend a $50 million loan to MTD Manila Expressway Corp. (MMEC), formerly Hopewell Crown Infrastructure Inc., which is led by MTD Capital of Malaysia.

The IFC board has yet to clear the $50 million funding.

The cost of the Slex upgrade, which includes the rehabilitation of the Alabang viaduct, is estimated to reach P10 billion.

MMEC has also expressed interest to borrow P7.7 billion from multilateral lending institutions that offer lower interest rates and longer payment periods.

The big-ticket project involves the road widening of Slex from Alabang to Calamba, Laguna and its extension to the Southern Tagalog Arterial Road in Santo Tomas, Batangas.

The MMEC has released $2.5 million as advanced funding for Slex.

The planned $50 million loan to MMEC is part of the $120 million to $150 million funding, which IFC plans to invest in the Philippines for fiscal year 2006.

Bhagat said IFC also plans to channel some of its investments to infrastructure projects, including rural electrification, socialized housing projects and the banking and property sectors.

IFC and listed firm Filinvest Development Corp. last year signed a P2.25 billion loan agreement that would allow the property firm owned by the Gotianun family to expand its mortgage financing.

IFC also provided a $12.5 million loan to Megaworld Corp. for the construction of a new call center building within Eastwood City in Libis.