MEGAWIDE Construction Corp. has agreed to sponsor a P3-billion loan for its subsidiary to finance the Carbon Market mixed-use development in Cebu City.

In a regulatory filing on Thursday, Megawide said that it had executed on May 10 an omnibus loan and security agreement with its unit, Cebu2World Development, Inc., and lenders Philippine National Bank and Land Bank of the Philippines.

Under the agreement, the listed company will act as share security grantor, subordinated loan security grantor, as well as sponsor for the loan agreement. Cebu2World is the borrower, mortgagor, grantor, and assignor.

Megawide has agreed to create a security interest over its present and future shares of stock and its entire ownership interest in Cebu2World for the unit to avail of financing for the development of the Carbon Market.

The financing includes availing of a term loan facility in the aggregate amount of up to 60% of the project’s cost or P3 billion, whichever is lower. The mixed-use development is a joint venture between Cebu2World and Cebu City.

The agreement has named PNB Capital and Investment Corp. as lead arranger and book runner, Land Bank of the Philippines as co-lead arranger and book runner, and Philippine National Bank, acting through its trust banking group, as facility agent and security trustee.

The Carbon Market development is a 50-year joint venture with the Cebu City government for the modernization of a 100-year-old farmer’s market into “a commercial, heritage, and cultural district with a multimodal and integrated transport hub.” 

It is an unsolicited project worth P5.5 billion, with its first phase launched in the second quarter of 2022.

Under the contract, Cebu City will receive an annual guaranteed payment of P50 million with a 10% escalation every five years. — Justine Irish D. Tabile