GMR Megawide ties up funds for Philippines airport project

GMR Megawide Cebu Airport Corporation (GMCAC), a joint venture of GMR group and Manila-based Megawide Construction, has tied up the finances to the tune of nearly $525 million for Mactan Cebu International Airport contract in Philippines, the company said today.

"The financing will fund 70% of the total project cost of PHP 33 billion ($750 million). The loan is arranged by a consortium of six banks," GMR said.

Total equity contribution of GMR to GMCAC will be approximately $90 million, out of which the Indian partner has already invested $48 million and does not envisage any further investment in the near future, it said.

GMR holds 40% while Megawide holds 60% of total stake in the JV, the company said.

GMCAC shall be responsible for construction, development, renovation, expansion and operation of the Mactan Cebu International Airport for a period of 25 years, as provided in the concession agreement.

MCIA is the first airport in Philippines to be privatised under the administration's ambitious PPP programme aimed at modernising key infrastructure assets.

In the international competitive bidding process, GMR-Megawide consortium had emerged as the highest bidder after offering a bid premium of 14.4 billion Philippine Pesos (approximately $305 million). The formal award of the project in April was followed by a six-month transition period to complete project formalities leading to the transfer of operations to GMCAC on November 1, 2014.

GMR Infrastructure Ltd's Chairman G M Rao said: "he financial closure of the project signifies the confidence of the banks in the abilities of GMR and our partner Megawide. GMR Group has proven credentials in airport operations and modernisation".

As part of the overall master plan, GMCAC will build a brand 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.

GMR-Megawide consortium plans to develop Mactan-Cebu International Airport into a regional hub in Philippines, creating passenger and cargo traffic growth, jobs for local community, giving a boost to tourism traffic and creating multiplier economic benefits for the region, GMR added.