By Lawrence Agcaoili | The Philippine Star | August 18, 2014
MANILA, Philippines - The government needs the consent of at least a two-thirds of the private shareholders of Metro Rail Transit Corp. (MRTC) for a complete government take over of the facilities of the Metro Rail Transit Line 3 (MRT-3).
David Narvasa, spokesman of MRT Holdings (MRTH), said the company has not authorized MRTC to enter into a compromise agreement with the government with regards to an equity value buyout.
“MRTH has informed the board of directors of MRTC that they have no authority to enter into any compromise with the Philippine Government and/or to agree to an Equity Value Buy-Out of the MRT-3 System without the express consent of at least two-thirds of MRTC’s shareholders pursuant to the provisions of the Corporation Code,” Narvasa said.
MRTH is 100 percent owner of all the shares in MRTC that owns the facilities of the mass transit system along EDSA that it built through a Build-lease-transfer (BLT) scheme with the government.
“MRTH has not authorized any compromise agreement of the pending Arbitration Case in Singapore,” he said.
Narvasa made the statement in reply to the pronouncement made by Transportation Secretary Joseph Emilio Abaya early this month that the Department of Transportation and Communications (DOTC) would sign a compromise agreement with MRTC within the third quarter to pave the way for the completion of the equity value buy out.
He clarified that MRTH has not received any official communication from the government regarding any offer for a compromise.
“The nominee directors of MRTH in MRTC have also not communicated to MRTH that the Philippine Government has officially offered a compromise,” Narvasa said.
In March last year, President Aquino signed EO 126 stating that DOTC and the Department of Finance (DOF) should buyout MRT 3 from MRTC pursuant to a build-lease-transfer (BLT) agreement.
In fact, the P56 billion budget for the complete government takeover of the MRT3 is already available as it was included by the Department of Budget and Management (DBM) in the P2.265 trillion 2014 national budget.
The proposed takeover would help Land Bank of the Philippines and Development Bank of the Philippines unload their combined 80 percent economic interest in MRTC after receiving several warnings from the Bangko Sentral ng Pilipinas (BSP) regarding its investments in the mass transport system.
The proposed government takeover would result in billions of pesos in savings for taxpayers, who provide subsidies mainly to cover the 15 percent return on investment guaranteed to MRTC. The government shells out about P7 billion worth of subsidy for the MRT-3 operations.
Infrastructure giant Metro Pacific Investments Corp. (MPIC) has yet to exercise its option over 48 percent interest in MRTC after it entered into cooperation agreement with the Sobrepeña-owned Fil-Estate Corp. in November 2010 regarding its interests and rights in Metro Rail Holdings Inc., Metro Rail Transit 2 Inc., and Monumento Rail Transit Corp.
MRTC filed an arbitration case in Singapore against the Philippine government in January 2009 due to failure to pay equity rentals in a timely manner. It, however, lost another case over the decision of the DOTC to award a P3.8 billion contract to CNR Dalian Locomotive & Rolling Stock Co. of China for the supply of 48 brand new light rail vehicles for MRT3.