GMR-Megawide achieves $750 mn financial closure for Mactan-Cebu International Airport

GMR-Megawide Cebu Airport Corporation (GMCAC), a joint venture between GMR Infrastructure (40 per cent shareholding) and Megawide Construction Corporation (60 per cent shareholding), has signed financing documents for its Mactan Cebu International Airport (MCIA) in the Philippines.

The loan will fund 70 per cent of the total project cost of Philippine pesos 33 billion (approximately $750 million). The loan is being financed by a consortium of six banks.

BDO Capital & Investment Corporation acted as lead arranger to the transaction.

The total equity contribution of GMR to GMCAC will be approximately $90 million, of which GMR has already invested $48 million. It does not envisage any further investment in the near future.

GMCAC will be responsible for construction, development, renovation, expansion and operation of the Mactan Cebu International Airport for 25 years, as provided in the Concession Agreement.

MCIA is the first airport in the Philippines to be privatised under the administration’s ambitious public-private partnership programme, aimed at modernising key infrastructure assets.

In the international competitive bidding process, the GMR-Megawide consortium had emerged as the highest bidder after offering a bid premium of 14.4 billion Philippine pesos ($305 million).

Commenting on this occasion, G M Rao, Chairman, GMR Infrastructure Ltd, said: “The financial closure of the project signifies the confidence of the banks in the abilities of GMR and our partner Megawide.”

The Cebu airport project is expected to make profits from the first year itself. With existing connections to tourist spots in the central and southern Philippines and with direct flights from Asian cities such as Hong Kong, Singapore, Seoul and Tokyo, it has huge untapped growth potential.

As part of the overall master plan, GMCAC will build a new terminal building within three years to cater to the growing traffic. At the same time, the immediate priority will be to upgrade the existing terminal and enhance operating systems and processes to improve service quality and efficiency.

Alongside, GMCAC will lay adequate emphasis on corporate social responsibility and work towards socio-economic development in the surrounding region.