7MRT -7 Project MissionTransportation - not only providing reliable connection for Commonwealth, Fairview and Bulacan commuters, but uniquely addressing decongestion of EDSA by providing an alternative route for the provincial buses from the North.Decongestion - of Metro Manila thru obligation for the construction of the satellite town in San Jose del Monte.Ridership Risk - Uniquely and first time undertaking of private sector to assume full responsibility for the ridership risk and the O&M cost.
8MRT -7 Project MissionEnergy Savings – NEDA study indicates project causes $2.4Billion in Forex savings over the concession period base on crude oil price of $50 per barrel.Employment – the project and the satellite township undertaking will create over 20,000 new jobs throughout the concession period.Housing – uniquely creating for the low and middle class income group an affordable housing linked by transportation arteries to their work destinations.
9MRT -7 Project MissionAir Pollution – Significantly reducing air pollution over the MetropolisInvestment – opening opportunities in the project and its real estate development for $3Billion foreign and local investment pump priming of the economy.
11FINANCIAL & ECONOMIC VIABILITY (BASIC) Project EIRR %*Project FIRR %Investors FIRR %Government FIRR Deficit Neutral* Excluding Road and Real Estate Development
12Fund Source DEBT EQUITY US$309M US$926M $100 M $126 M $800M $109 M of EPC = $1,000 MDEBTEQUITY$100 M
13Intermodal TerminalSixty (60) slots for simultaneously bus loading / unloading.Train undergroundSecond floor providing facilities for up to 3,000 waiting passengers for their ridesComplex provide eleven (11) sets of escalators for rapid movement of commuters.
14Real Estate Development Opportunities Private investors to develop 2 Million sq. meters residential space900,000 sq. meters commercial space, malls, and community development facilities throughout the concession period.
15Investors RecoveryUS$ 108 Million per year capacity fee payment for 20 years70% Sharing of net passenger revenue after O&M80% Sharing in advertising and commercial development over the stations.Real Estate Development IncomeCapacity fee of US$100,000 from year 2032 to 2037Government commits to fare adjustments
16Government Recovery of Amortization Payment 30% Sharing of net passenger revenue after O&M20% Sharing in advertising and commercial development over the stations.20% Sharing on Real Estate DevelopmentProject and real estate development projected taxesIncrease ridership to Government operated rail system.NPV (10%) of total Government undertaking $620 Million.Mere payment for gradual transfer of the assets worth US$1.2Billion.Government to recover its entire exposure thru tax benefits from the various activities generated by the project and the real estate development
17Passenger FareUnified fare is assumed per km for all existing Mass Transit projectFare is based on LRT-1 and MRT-3, 2003 per km and adjusted to reflect inflation and foreign exchange fluctuation.Agreed formula for incremental fare adjustmentPer agreed concession agreement, if actual fare is not adjusted to agreed fare, Government shall pay the difference thru deduction from other government revenues resulting from the project.Extra ordinary fare adjustment is provided for in the concession agreement when circumstances require.
18Philippine Macro Economics Balanced deficit is consistently reducedBalanced budget projected by 2008 – two years ahead of scheduleContinuously reduced foreign debtInflation much restrained(from Double Digit in the 90’s to around 3% at present)Larger inflow of stable foreign remittances (OFW)Larger tax collectionEconomic growth in the first quarter of 2007 reached 6.9%, best in 17 yearsCredit rating is improving and expected to rise next quarter.Overall economic outlook best since 1978 much better than 2001 when proposal was made.
19Project Risks Country risk Philippine Outlook much improved Sovereign risk and risk of repatriation can be insured thru OPIC/MIGA and the likeConstruction cost is mitigated thru single point of responsibility contract with an EPC contractor at fixed price.Cost overruns due to delays and inflation (ROP faults) adjustment provided in the contractO & M CostAgreements with maintenance and project engineering management groupsIn-house Experienced TeamMarket risk thru conservative ridership assumption and agreed fare structure (Metro Manila traffic is overwhelming).
20Project Schedule TARGET DATES: Complete Swiss Challenge - June 2007 Project Awarding - October 2007Contract Signing - December 2007Financial Closing - December 2008Start of Construction of Rail - July 2010Start of Real EstateConstruction - July 2011Rail Project Completion - July 2012
21Project Task Completed ACHIEVEMENTS(February 2001 – February 2007):Ridership studiesEndorsement by DOTC of ULC (BVI) as the Original ProponentNEDA-ICC first and second pass approvalsNEDA Board approval for publication of Swiss ChallengeDepartment of Justice clearance of the Terms of Reference for Swiss ChallengePublication of Swiss Challenge bid closing date on June 2007
22Project Task PENDING (April 2007 – December 2007): Finalize pending negotiations for the following agreements:Engineering and Procurement ContractOperations and Maintenance ContractProject Engineering Management ContractFinancial Services ContractMatching, if necessary, of possible Swiss ChallengerNegotiate details of the Concession AgreementPerformance Bond on Real Estate Development
23Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development) BASIC ASSUMPTIONCash Flows from Capacity Fees and Net Passenger Revenueswith 300,000 initial ridership (in million US$)YearEquityInfusionProjected Gross Pax Rev.GOP Share in Pax Rev.Capacity FeesO&MLoanRepaymentIncomeTaxNet Flowto ULC-3(120.0)--2(100.0)-1(88.9)144.0(2.7)108.0(35.0)(100.1)14.2252.5(4.7)(36.8)19.0361.5(6.9)(38.6)24.0470.9(9.1)(40.5)29.2580.8(11.8)(41.3)35.610137.1(27.4)(45.6)(115.7)(27.0)29.412163.3(34.7)(47.5)(37.5)(34.6)116.915175.8(37.6)(50.4)(39.2)119.120198.9(43.0)107.9(55.6)(21.9)(58.0)128.325225.0(49.1)0.1(61.4)(32.3)82.4@ 12 years@ 15 years@ 20 years@ 25 yearsIRR4.6%8.6%11.2%11.8%
24Project Sensitivities Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development)Project SensitivitiesProject CostO & M(initial year, escalating at 5% every year)Investors’ FIRRat US$ Bat US$ 35 M11.8%10% decreaseat US$ 31.5 M12.2%at US$ B14.0%10% decrease at US$ 31.5 M14.4%
25Project Sensitivities Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development)Project SensitivitiesProject CostO & M(initial year, escalating at 5% every year)Investors’ FIRRat US$ Bat US$ 35 M11.8%10% increaseat US$ 38.5 M11.4%at US$ B10.0%10% increase at US$ 38.5 M9.6%
26Project Proponents Universal LRT Corporation (with 15 local and international investors)A consortium of Alstom and Bouygues of FranceO&M service provider, SMRT SingaporeSubsequent to Swiss Challenge price matching mechanism as provided by the BOT Law, several institutional investors including the IFC are expected to join.
27Universal LRT (BVI) Corporation Board of DirectorsMr. Antonio A. Henson Chairman of the BoardPresident, SM Investment CorporationMr. Eli Levin Managing Director (CEO)Chairman, E.L. International Holdings (BVI) Ltd.Mr. Vicente V. de Villa Executive DirectorExecutive Director, E.L. Enterprise, Inc.Mr. George Y. Uy Executive DirectorExecutive Director, E.L. Enterprise, Inc.Ms. Imelda D. Bautista DirectorChairwoman & CEO, Premier Gold Group Ltd.Mr. Roberto F. de Ocampo DirectorFormer President, Asian Institute of ManagementMr. Roberto Jose L. Castillo DirectorPresident and COO, EEI CorporationMr. Sergio Ortiz – Luis DirectorFormer Chairman, Export and Industry Bank
28Universal LRT (BVI) Corporation Board of DirectorsMr. Geronimo F. Velasco, Jr. DirectorPresident, Hollington Management Ltd.Mr. Claudio B. Altura DirectorChairman of the Board, TCGI EngineersMr. Jovencio F. Cinco DirectorPresident and CEO, Penta Capital Investment CorporationMr. Geronimo Velasco, Sr. DirectorChairman, Hollington Management Ltd.Mr. Jose Tan Sio DirectorExec. Vice President & CFO, SM Investment CorporationMr. Wellington Y. Tong DirectorRepresentative, Merlin Capital, Inc.Mr. George Go Director