17 Jun 2011
The Power Sector Assets and Liabilities Management (PSALM) Corporation, as part of its liability management program, recently secured a PhP75-billion syndicated term loan facility (STLF) to augment its present working capital requirements and to partially refinance its existing financial obligations as prescribed in the Electric Power Industry Reform Act (EPIRA).
"PSALM is exploring various liability management strategies to adequately address this year's financial requirements," said PSALM President and Chief Executive Officer Emmanuel R. Ledesma, Jr.
According to Ledesma, PSALM was compelled to secure additional funding to fulfill its mandate to operate and maintain the plants still under its portfolio, which necessarily includes the unavoidable costs of fuel that PSALM has to purchase for its fuel-based plants.
Ledesma further disclosed that the deferment of the asset privatization program and the inclusion of the National Transmission Corporation's operating expenses in PSALM's financial requirements called for the need to raise funds.
The PSALM Board approved the PhP75-billion STLF in its 07 February 2011 meeting and the corresponding utilization of the proceeds to partially address the shortfall in 2011. This was subsequently endorsed by the Department of Finance (DoF) to enable PSALM to adequately address its financial requirements.
Ledesma stated that the PhP75-billion loan will be used solely to cover PSALM's 2011 financial obligations, including independent power producer debts and other contractual obligations arising from the operations of the remaining unsold assets. He added that part of the loan facility will be used to pay the PhP25-billion short-term loan with the Land Bank of the Philippines that fell due on 19 May 2011 as agreed upon with the DoF. The rest of the loan facility will be used to pay maturing obligations which include the PhP18-billion bond secured in 2004 due in August 2011.
PSALM, however, still has to hurdle the shortfall in succeeding years, including the company's working capital requirements. To address this, PSALM is exploring the following options: (1) implement the collection of the Universal Charge for stranded debts and stranded contract costs when the applications are approved by the Energy Regulatory Commission; (2) accelerate the collection of receivables from the various winning bidders through prepayment and/or other financial structures within the confines of the contract; (3) support the government's thrust of consolidating the government-owned and -controlled corporation's debts with the national government to minimize costs through an on-lending program; and (4) tap the capital markets for fund-raising purposes.
Strategic Communications and Partnership Division |