Business

Utang pa more! Saavedra long on desire for NAIA, but short of cash to fund P155B takeover

Bilyonaryo Edgar Saavedra got his wish to take charge of modernizing the Ninoy Aquino International Airport (NAIA) after the superconsortium led by Lucio Tan and Lance Gokongwei backed out because government refused to accept their demands.

Bilyonaryo Edgar Saavedra got his wish to take charge of modernizing the Ninoy Aquino International Airport (NAIA) after the superconsortium led by Lucio Tan and Lance Gokongwei backed out because government refused to accept their demands.

But does the Megawide chairman and CEO have the cash to bankroll his proposal?

The 34th richest Filipino, with net assets of $260 million as of 2019 according to Forbes, offered to upgrade and rehabilitate the NAIA under an 18-year concession for P155 billion, or more than 50 percent
of the P102 billion bid by the superconsortium.

That offer was made in 2018 which seemed like a century ago considering the gloomy outlook for the air travel industry following the coronavirus pandemic in March this year.

Saavedra hopes to haggle for better terms with the government after getting original proponent status for NAIA.But given the government’s hardline stance on the terms of the NAIA rehabilitation, it remains to
be seen if it will bend for Saavedra even just to save face after being left holding the bag by the group of bilyonaryos.

Megawide is currently mired in debt with a net gearing or debt to equity ratio of 244 percent as of March. It also has P9.7 billion
debts due this year.

Its two big projects were bankrolled by heavy borrowings – P23.5 billion for the Mactan-Cebu International Airport (MCIA) in 2014 (15-year loan with payments starting in 2019) and P3.9 billion for
the Paranaque Integrated Terminal Exchange (PITX) project (first payment due in 2021).

Its other bank loans ballooned to P10.247 billion in 2019, or nearly double the P5.651 billion recoded in 2018.

Megawide’s fixed annual interest
rates are pegged at 5.13 percent to 7 percent in 2019 or more than
double the 2.6 percent to 2.8 percent interest it was charged in 2017.

The company paid P629.9 million in interest expense on bank loans last year, nearly four times the P160.9 million it paid in 2018.

Overall, Megawide has used up P44.2 billionn out of its total
credit line of P49.178 billion in 2018.

Megawide is one of the hardest hit companies by the coronavirus as its bread-and-butter construction and airport operations have practically
ground to a halt during the lockdown.

Truly, be careful what you wish for, it just might come true.

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