Hull painting In this photo distributed by environmental activist group Greenpeace, members of the group paint "Quit Coal" on the hull of MV Sam John Spirit, which was waiting to unload its cargo at the Pagbilao coal-fired power plant in Quezon province, around 300 kilometers south of Manila, on Saturday. --AP/GREENPEACE

AFTER months of negotiations, First Metro Investment Corp. released its share of the P2-billion debt paper floated by the Philippine Ports Authority (PPA) last year.

Virgilio Chua, First Metro Investment vice president, said in a telephone interview they have released the remaining P500 million in bonds to the PPA about two weeks ago after talks with authority officials.

“We have released [the remaining P500 million] on May 13… and it mirrors the initial tranche,” Chua told the BusinessMirror, referring on the bond structure and interest rates.

He added that there was no change in the terms and conditions of the bond float.

The P2-billion PPA bond, jointly underwritten by state-owned Development Bank of the Philippines (DBP) and First Metro Investment, carries a 7-percent interest rate and matures in seven years—redeemable in 2014.

The first tranche of P1 billion was released by both the DBP and First Metro Investment last July.

The release capped months of negotiations between the underwriters and the state ports authority on the disbursement of the second tranche. The DBP had released its remaining share of P500 million in March.

The banks were wary of the PPA’s ability to repay the debt that stemmed from a ruling by a division of the Supreme Court on the Batangas Port Phase 2 expropriation case on August last year.

The ports authority offered and paid landowners P400 to P500 per square meter of agricultural land. The High Court division upheld an earlier decision by the Regional Trial Court in Batangas that set the compensation to P5,500 per square meter. 

The object of the case is 1,298,340 square meters of land. Should the High Court rule with finality, the PPA would have to pay the landowners P11 billion to P14 billion, including interest and penalties.

The PPA earns close to P2 billion a year, half of which is channeled to the national coffers.

Earlier, a source privy to the deal said the underwriters argued they should get higher interest rate as the PPA’s risk profile has changed since the first tranche was disbursed last July.

Net proceeds of the bond float were earmarked for the modernization of six priority ports that include the newly constructed wharf at Cagayan de Oro, Sasa Wharf port expansion, Iloilo Container Port Complex, Ozamis Oriental wharf, Phase 2 of the wharf expansion in Zamboanga port and the General Santos City port expansion.

Since allotments of the money from the bond float have already been made, PPA General Manager Oscar Sevilla raised a caveat that the underwriters may be liable should contractors sue the ports authority for nonpayment.

First Metro Investment releases share of PPA float

AFTER months of negotiations, First Metro Investment Corp. released its share of the P2-billion debt paper floated by the Philippine Ports Authority (PPA) last year.

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