The airport subsidiary of construction and Infrastructure conglomerate Megawide Corp. of bilyonaryo Edgar Saavedra has struck a deal with its lenders to relax covenants on its P23.9 billion debt used to develop the Mactan-Cebu International Airport (MCIA).
BDO Unibank, Philippine National Bank, Bank of the Philippine Islands, Development Bank of the Philippines, Land Bank of the Philippines, Metropolitan Bank and Trust Co. and the Asian Development agreed to give GMR Megawide Cebu Airports Corp. (GMCAC) some breathing room amid the tough business environment.
Megawide said the renegotiation of the loan contracts would “temporarily free up P3.6 billion in cash from 2021-2023 and reinforce GMCAC’s financial position which can be utilized to support operations while the ongoing pandemic limits air travels.”
Under the renewed loan agreement forged by both Megawide and its creditor-banks, principal payments will be deferred to 2027-2029 when the airline industry is expected to have fully recovered from the worst financial crisis in its history.
“We are glad that the negotiations with our lenders were finalized and we express our sincerest gratitude to our financial partners, who from the very start of this pandemic have been very supportive. The agreement is a strong sign of support and confidence in Megawide’s airport business model. The more relaxed debt servicing schedule will provide our airport operations a clearer runway to full recovery once the situation normalizes,” said Saavedra, chairman and CEO of Megawide.
As the Covid-19 pandemic brought worldwide travel to a halt and created a significant turbulence in the airline industry, GMCAC sought a 30-day grace period for its six-month debt servicing from December 15, 2019 falling due on June 15, 2020. The banks unanimously approved the request on June 11, 2020.
With travel restrictions still in place, GMCAC requested for a further extension of settlement to September 2020, which GMCAC duly paid on September 15, 2020, including additional interest on the principal and interest accruing from June 15 to September 15.
On December 11, 2020, GMCAC sent notifications to its lenders to defer its principal and interest payments falling due on December 15, 2020 to February 15, 2021as the pandemic intensified.