The joint venture (JV) between Bangalore-based developer GMR Infrastructure (40 percent shareholding) and Manila-based EPC Megawide Construction Corporation (60 percent) has announced financial close of the Mactan Cebu International Airport public-private partnership (PPP) expansion project awarded last April, with a loan facility from six local banks worth $525 million, i.e.70 percent of the total project cost of $750 million.
The 25-year concession agreement between the GMR-Megawide Cebu Airport Corporation (GMCAC) and the Mactan Cebu Airport is the first airport privatisation under the Aquino administration’s PPP programme.
“The 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 modernization and we are confident that we will undertake this prestigious project in a timely manner and deliver an airport that Cebuanos and Filipinos will be proud of,” said GMR Infrastructure chairman, G.M. Rao.
“The Cebu airport project is an excellent addition to GMR Group’s portfolio with cash inflows from day one and is expected to make profits from the first year. 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. The underdeveloped commercial business and a decisive, stable regulatory regime provide an opportunity to convert the traffic potential into bottom-line growth,” he added in a statement.
Equity contributions from GMR and MCC to the project are $90 million and $135 million respectively.
BDO Capital and Investment Corp led a syndicated loan consortium comprised of the Bank of the Philippine Islands, the Development Bank of the Philippines, the Land Bank of the Philippines, the Metropolitan Bank & Trust Co, and the Philippine National Bank.
Expansion works entail the construction of a new terminal, and revamping of the existing one, within a three-year time span.
Among new features, the existing terminal will boast: a more spacious check-in area with additional counters and enhanced automated baggage handling systems; conveniently located airline lounges; international and domestic terminals linked by a bridge for passengers making connecting flights; adequate parking facilities; aircraft parking stands served by bus transfers; and an adjacent airport village mall complex.
The GMR-Megawide consortium plans to develop the Mactan-Cebu International Airport into a regional hub in the Philippines, boosting passenger and cargo traffic and spurring jobs for the local community through increased tourism activity.
The airport is currently the second gateway to the Philippines and has been suffering overcapacity since 2012. Targeted capacity for 2017 is 8 million passengers although the airport was already handling 7 million passengers in 2013 with a capacity of 4.5 million.