YNN submits amended performance bond to PSALM

26 Jan 2006

The Power Sector Assets and Liabilities Management Corporation has received from YNN Pacific Consortium Inc., winning bidder of the 600-megawatt Masinloc coal-fired power plant, its amended $11.14-million performance bond that extends the expiry date from April 7, 2006 to August 2006.

PSALM required YNN last December to extend the effectivity of its irrevocable letter of credit issued by the Bank of China (Hong Kong) Limited after asking the consortium to deliver the upfront payment of $222 million on or before March 31. Failure to deliver the amended bond would have allowed PSALM to forfeit the original bond.

In line with the asset purchase agreement, PSALM set YNN's deadline for the remittance of the upfront payment and closing deliverables after completing all of its conditions precedent, including getting the consent of multilateral creditors like the World Bank, Asian Development Bank and Japan Bank for International Cooperation.

PSALM issued its closing deliverables last November 25. Failure to complete would have allowed YNN to walk away from the deal after 30 days without risk of forfeiting the performance bond.

"It is just a matter of time and the Philippine government can eventually collect from YNN," said PSALM president Nieves L. Osorio. "We have adopted the necessary measures to protect the interests of the Philippine government and we have seen that YNN is exerting all efforts to deliver on its commitments."

Strategic Communications and Partnership Division
Tel. No. (632) 9029067