With Philexim's backing, AG&P wins $1.4-B project

Business Mirror
Feb 16, 2006

With Philexim's backing, AG&P wins $1.4-B project

ATLANTIC, Gulf & Pacific Company of Manila, Inc. (AG&P) has started its long climb back to its former stature after it cornered a big contract in New Caledonia due largely to the decision of the Philippine Export Import Credit Agency (Philexim) to guarantee its financing requirements.

AG&P was chosen by Goro Nickel S.A., a consortium composed of Inco, the largest nickel-mining company in the world, Sumitomo Metal Mining Co. Ltd. and the French government, to do the fabrication of the components for a nickel plant to be put up in the consortium's $1.4-billion nickel-cobalt mining project in the French territory of Goro, New Caledonia.

The consortium is already shipping the raw materials to AG&P's 40-hectare heavy fabrication yard in Batangas for conversion into modules for the steam plant, stick built steel, grating, treads and floor plates, boiler package and condensers.

Angelito D. Bermudo, AG&P president and chief executive officer, told the BusinessMirror that half of the fabrication works are already finished. AG&P will start the construction of the plant probably by the middle of the year.

The company currently has 700 employees doing the fabrication in Batangas and would send 1,000 personnel composed of engineers and skilled workers to New Caledonia for the construction phase.

AG&P, Bermudo said, has cornered $10 million of the total $1.4-billion mining project as of December, making it the first largest undertaking that the company is participating in since undergoing rehabilitation in 2003.

This, Bermudo said, has put AG&P on course of getting out rehabilitation in six years instead of the scheduled 12-year rehabilitation plan. AG&P briefly closed shop from 2000 to 2002 after seeing its grandeur in 1990s when it peaked as the biggest employer in Batangas with 5,000 employees. AG&P, now largely owned by DMCI Holdings, has been in the Philippines since 1900. Among its initial projects in the country are the Luneta Park and the Ayala Bridge near Malacañang.

Since undergoing rehabilitation, financial institutions have been reluctant to do business with AG&P, making it hard for the company to bid for projects and pay out its obligations.

Philexim, however, guaranteed the $1.25-million loan AG&P entered into with lender Philippine Veterans Bank, when the company entered its bid for the New Caledonia project. The guarantee convinced the Goro consortium that AG&P was really capable of undertaking the project. "Goro Nickel S.A. found us credible with Philexim's backing," Bermudo said.

Also with Philexim's backing, Bermudo said AG&P would be able to reestablish its credit worthiness. Max V. de Leon

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