SMC: Laiban may cost $2b
Friday, 20 February 2009 00:43
San Miguel Corp., the country’s biggest food and drinks company, may spend as much as $2 billion on a proposed water project and repay a loan that limits investment outside its main business.
The company plans to repay or refinance a $930-million loan to free itself from covenants that restrict it to investments in food and beverages, president Ramon Ang told reporters after a speech in the company’s headquarters.
San Miguel last year bought 27 percent of power retailer Manila Electric Co. and an option to buy control of oil refiner Petron Corp. to boost growth at the company, which already controls 95 percent of the nation’s beer market.
The food maker on Feb. 9 said it offered to build the Laiban Dam project in Tanay, Rizal to boost Metro Manila’s water supply. The proposed project, initially estimated to cost $1 billion (P48 billion), will be a venture with the state’s Metropolitan Waterworks and Sewerage System and a foreign partner, it said.
The company’s San Miguel Brewery Inc. unit may sell peso bonds this month, Ang said in his speech. It will try to raise all of a P38.8-billion requirement in the local currency, he said.
San Miguel will spend P9.9 billion to expand its food business, Ang said without providing specifics, such as a time frame.
Manila Electric also plans to go into the broadband Internet business, he added.
Water concessionaires Manila Water Co. Inc. of the Ayala group and DMCI-MPIC Water Co. of Metro Pacific Investments Corp. and DMCI Holdings Inc. on Tuesday gave a lukewarm support to the Laiban Dam project.
Metro Pacific chairman Manuel Pangilinan said the company was looking at other alternative sources of water, which might be cheaper than the Laiban Dam in Tanay, Rizal.
“There might be alternative sources of water supply which might be cheaper than Laiban so we are looking at that. Of course we are not ruling out Laiban. But if it doesn’t make sense for us economically, why we should do it,” Pangilinan said.
Pangilinan told reporters that DMCI-MPIC Water would tap shortly the Putatan treatment plant in Muntinlupa, which is capable of providing 300 million liters a day.
The facility, originally designed as part of an irrigation system, was recently turned over to DMCI-MPIC Water by the National Irrigation Administration.
Manila Water chief finance officer Luis Juan Oreta said the huge capital needed for the development of Laiban Dam could make the water supply expensive.
