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MRT – 7 Project Presentation

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  1. MRT – 7Project Presentation June, 2007

  2. Multi-purpose Transportation Solution with Real Estate Development Component The MRT – 7 Project A lead Infrastructure Project Metro Manila, Philippines June 2007

  3. Enhancing infrastructure priority development project thru partnership between the private and public sectors

  4. MRT - 7 Project • Elevated MRT • 12.11Km • At-Grade MRT • 6.655 Km • Open-Cut MRT • 1.445 Km • Tunnel MRT • 0.785 Km • 6 Lane Road • 22.0 Km

  5. MRT-7 Stations • Elevated • 8 Stations • At-Grade • 3 Stations • Depressed • 3 Stations

  6. Project Costs In Million US Dollars $1.235 B

  7. MRT -7 Project Mission • Transportation - 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.

  8. MRT -7 Project Mission • Energy 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.

  9. MRT -7 Project Mission • Air Pollution – Significantly reducing air pollution over the Metropolis • Investment – opening opportunities in the project and its real estate development for $3Billion foreign and local investment pump priming of the economy.

  10. Financial Overview

  11. FINANCIAL & ECONOMIC VIABILITY(BASIC) • Project EIRR 21.8%* • Project FIRR 11.5% • Investors FIRR 11.9% • Government FIRR Deficit Neutral * Excluding Road and Real Estate Development

  12. Fund Source US$309M US$926M $100 M $126 M $800M $109 M of EPC = $1,000 M DEBT EQUITY $100 M

  13. Intermodal Terminal • Sixty (60) slots for simultaneously bus loading / unloading. • Train underground • Second floor providing facilities for up to 3,000 waiting passengers for their rides • Complex provide eleven (11) sets of escalators for rapid movement of commuters.

  14. Real Estate Development Opportunities • Private investors to develop 2 Million sq. meters residential space • 900,000 sq. meters commercial space, malls, and community development facilities throughout the concession period.

  15. Investors Recovery • US$ 108 Million per year capacity fee payment for 20 years • 70% Sharing of net passenger revenue after O&M • 80% Sharing in advertising and commercial development over the stations. • Real Estate Development Income • Capacity fee of US$100,000 from year 2032 to 2037 • Government commits to fare adjustments

  16. Government Recovery ofAmortization Payment • 30% Sharing of net passenger revenue after O&M • 20% Sharing in advertising and commercial development over the stations. • 20% Sharing on Real Estate Development • Project and real estate development projected taxes • Increase 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

  17. Passenger Fare • Unified fare is assumed per km for all existing Mass Transit project • Fare 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 adjustment • Per 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.

  18. Philippine Macro Economics • Balanced deficit is consistently reduced • Balanced budget projected by 2008 – two years ahead of schedule • Continuously reduced foreign debt • Inflation much restrained • (from Double Digit in the 90’s to around 3% at present) • Larger inflow of stable foreign remittances (OFW) • Larger tax collection • Economic growth in the first quarter of 2007 reached 6.9%, best in 17 years • Credit rating is improving and expected to rise next quarter. • Overall economic outlook best since 1978 much better than 2001 when proposal was made.

  19. Project Risks • Country risk • Philippine Outlook much improved • Sovereign risk and risk of repatriation can be insured thru OPIC/MIGA and the like • Construction 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 contract • O & M Cost • Agreements with maintenance and project engineering management groups • In-house Experienced Team • Market risk thru conservative ridership assumption and agreed fare structure (Metro Manila traffic is overwhelming).

  20. Project Schedule TARGET DATES: • Complete Swiss Challenge - June 2007 • Project Awarding - October 2007 • Contract Signing - December 2007 • Financial Closing - December 2008 • Start of Construction of Rail - July 2010 • Start of Real Estate Construction - July 2011 • Rail Project Completion - July 2012

  21. Project Task Completed • ACHIEVEMENTS (February 2001 – February 2007): • Ridership studies • Endorsement by DOTC of ULC (BVI) as the Original Proponent • NEDA-ICC first and second pass approvals • NEDA Board approval for publication of Swiss Challenge • Department of Justice clearance of the Terms of Reference for Swiss Challenge • Publication of Swiss Challenge bid closing date on June 2007

  22. Project Task • PENDING (April 2007 – December 2007): • Finalize pending negotiations for the following agreements: • Engineering and Procurement Contract • Operations and Maintenance Contract • Project Engineering Management Contract • Financial Services Contract • Matching, if necessary, of possible Swiss Challenger • Negotiate details of the Concession Agreement • Performance Bond on Real Estate Development

  23. Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development)BASIC ASSUMPTION

  24. Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development)

  25. Invest in ULC (HK), the SPC (excluding investments in the Real Estate Company and the Vertical Development)

  26. Project Proponents • Universal LRT Corporation • (with 15 local and international investors) • A consortium of Alstom and Bouygues of France • O&M service provider, SMRT Singapore • Subsequent to Swiss Challenge price matching mechanism as provided by the BOT Law, several institutional investors including the IFC are expected to join.

  27. Universal LRT (BVI) Corporation Board of Directors • Mr. Antonio A. Henson Chairman of the Board President, SM Investment Corporation • Mr. Eli Levin Managing Director (CEO) Chairman, E.L. International Holdings (BVI) Ltd. • Mr. Vicente V. de Villa Executive Director Executive Director, E.L. Enterprise, Inc. • Mr. George Y. Uy Executive Director Executive Director, E.L. Enterprise, Inc. • Ms. Imelda D. Bautista Director Chairwoman & CEO, Premier Gold Group Ltd. • Mr. Roberto F. de Ocampo Director Former President, Asian Institute of Management • Mr. Roberto Jose L. Castillo Director President and COO, EEI Corporation • Mr. Sergio Ortiz – Luis Director Former Chairman, Export and Industry Bank

  28. Universal LRT (BVI) Corporation Board of Directors • Mr. Geronimo F. Velasco, Jr. Director President, Hollington Management Ltd. • Mr. Claudio B. Altura Director Chairman of the Board, TCGI Engineers • Mr. Jovencio F. Cinco Director President and CEO, Penta Capital Investment Corporation • Mr. Geronimo Velasco, Sr. Director Chairman, Hollington Management Ltd. • Mr. Jose Tan Sio Director Exec. Vice President & CFO, SM Investment Corporation • Mr. Wellington Y. Tong Director Representative, Merlin Capital, Inc. • Mr. George Go Director

  29. Intermodal Animation

  30. THANK YOU