By Joyce Pangco Panares | Mar. 11, 2013 at 12:01am
PRESIDENT Benigno Aquino III has approved the government’s buyout of Metro Rail Transit Line 3 to end the pending arbitration between it and Metro Pacific Investments Corp., the company controlling MRT-3 and which has sued the government over delayed equity rental payments.
“The government is desirous to provide a more efficient and publicly-safe MRT Line 3 by introducing capacity expansion projects, put an end to the arbitration case filed by MRTC against the Philippines, and manage the financial burden on the part of the government posed by the build-lease-transfer agreement,” Mr. Aquino says in Executive Order 126.
EO 126 authorizes the implementation of an equity value buyout of MRTC. The government holds a 77-percent economic interest in the firm, but it does not have voting rights.
The order directs the Finance and Transport Departments departments, the Development Bank of the Philippines and Land Bank of the Philippines “to proceed with the implementation of the equity value buyout.”
The buyout will involve either an equity purchase involving all outstanding shares of stock and other securities issued by MRTC or an asset purchase of all rights, title and interests held by MRTC.
A compromise agreement will also be executed between the government and MRTC to end the arbitration case.
The Palace did not announce the amount required for the buyout, but EO 126 authorizes the Finance Department to “raise funding through the issuance of new borrowing, domestic or foreign, to carry out the EVBO and its components.”
MRT-3, which runs on Edsa from Taft Avenue to North Avenue, carries 540,000 passengers a day, or way above the original design capacity of 350,000 passengers daily.
The government pays about P7 billion a year to subsidize MRT-3’s operations.
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