YNN delivers acceptable $14-million performance bond

25 May 2006

The Power Sector Assets and Liabilities Management Corporation (PSALM) has received from YNN Pacific Consortium Inc., winning bidder of the 600-megawatt Masinloc coal-fired power plant, the $14-million performance bond required after extending the deadline from March 31 to June 30 to deliver the $227-million upfront payment, rentals and option price.

March 31 was the original deadline set by PSALM for YNN to deliver the upfront payment and June 30 was the first extension given.

PSALM pointed out that the performance bond is unconditional. "YNN tried to request for the inclusion of a bilateral power supply contract as an additional condition to drawing the same by PSALM," said Mr. Froilan Tampinco, vice president for Asset Management and Electricity Trading. "However, we did not agree to this since this is contrary to the terms of the Asset Purchase Agreement between YNN and PSALM."

YNN submitted the first $14-million performance bond within the period prescribed by PSALM as a condition to the extension. With the inclusion of the bilateral contract with the Manila Electric Company as an additional condition, PSALM rejected the earlier bond and demanded a revised one which YNN complied with.

PSALM now possesses the acceptable performance bond, Mr. Tampinco said. While the discussions were going on, the original $11-million bond remained effective and in PSALM's possession so the government's interest was amply protected, he added.

"It is still in the best interest of the government that PSALM give this transaction as much leeway to succeed. The bid of YNN is one that is difficult to duplicate should PSALM call for a rebidding prior to the deadline. By just granting a few months extension, PSALM is simply mindful of its EPIRA-mandate to maximize proceeds for the government. Meanwhile, Masinloc continues to operate and generate revenues for the National Power Corporation," Mr. Tampinco said.

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