Release of funds hinged on PCC deal approval, says proponent Infradev

PHILIPPINE Infradev Holdings, Inc. announced on Tuesday that the investment of Hong Kong Binjiang Industrial Ltd. in its wholly owned subsidiary Makati City Subway, Inc. (MCSI), which takes charge of the listed firm’s underground railway project, will no longer push through.

The Transport Oriented Development agreement between MCSI and Hong Kong Binjiang, a subsidiary of China’s Redco Properties Group, was also terminated, the builder of the Makati City subway said in a disclosure to the stock exchange.

Philippine Infradev said it agreed to the “mutual termination” of the share purchase agreement it executed on Feb. 18 last year with Hong Kong Binjiang.

“It has been almost one year since the transactions contemplated in the agreement were submitted to the Philippine Competition Commission (PCC) for approval, and to date, the same are still pending review,” Philippine Infradev noted.

“The effectivity of the transactions contemplated in the agreement, specifically the release of funds earmarked by Hong Kong Binjiang, were conditioned on the PCC’s approval of the transactions,” it added.

The listed firm announced in February last year that its board of directors and the board of directors of MCSI had approved the share purchase agreement, where Hong Kong Binjiang agreed to be part of the consortium that would undertake the construction, operation and maintenance of the Makati City Subway System.

Hong Kong Binjiang agreed to acquire a 35% direct equity investment in MCSI through the purchase of Philippine Infradev’s unpaid subscription rights to 15 million common shares of MCSI for a price of $30 million, payable within 10 business days from effectivity of the agreement; and subscription of 36 million primary common shares of MCSI for a total subscription price of $72 million, payable in two tranches.

Also on Tuesday, Philippine Infradev said MCSI executed a legally binding term sheet with Richer Today, Inc. for the financing and acquisition of lots for Station 5 of the subway project.

Under the term sheet, the two companies will form an unincorporated joint venture “for, among others, the financing and acquisition of lots in and around Station 5 of the Makati City Subway Project,” Philippine Infradev said in a separate disclosure.

It noted Station 5 is the project’s main construction site, as it is where the tunnel boring machines will be assembled and lowered.

China State Engineering Second Bureau Ltd., the engineering, procurement, and construction contractor engaged by Philippine Infradev’s subsidiary, is currently finalizing the construction plan for the station, the listed company added.

Richer Today, Philippine Infradev said, obligated itself to release “at least P775,885,265.22 within 120 days from signing of the term sheet, with at least P234,730,905.36 to be released within 10 business days” from Tuesday.

Philippine Infradev is the proponent of the $3.7-billion Makati City Subway Project, which aims to build a 10-kilometer intracity railway system in the business district. It wants to connect Ayala Avenue to the area of Ospital ng Makati in around 15 minutes.

Philippine Infradev Holdings shares closed 2.84% higher at P1.45 apiece on Tuesday. — Arjay L. Balinbin

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