Banks always take away your umbrella when it rains: RSA assures San Miguel has money to pay amid report of $1B funding shortfall

Ultra bilyonaryo Ramon S. Ang doused fears San Miguel Corp. (SMC) is facing a credit crunch following its power unit’s failure to secure a rate adjustment on its fixed-price supply contract with Manila Electric Co. (Meralco).

“Banks will always take away your umbrella when it’s rainy season when you don’t have the money. But we have the money to pay,” said the SMC vice chairman, president and CEO in an interview with Bloomberg.

Investors dumped SMC Global Power’s perpetual dollar bonds (down 10 percent to 14 percent on Friday) following a Bloomberg Intelligence report that the firm “risked a funding shortfall as high as $1 billion by next June.”

Bloomberg said surging interest rates and aversion to SMC’s coal exposure would make it difficult to refinance its loans.

But Ang said management has already dealt with the refinancing requirements of SMC. “We saw the situation might not improve after the crisis, so we went full blast on refinancing,” said Ang.

Ang expressed confidence SMC would be able to absorb the estimated P15 billion loss arising from the Energy Regulatory Commission’s rejection of its tariff adjustment to cover the 580 percent jump in coal prices to $440 per metric ton since it inked the fixed-supply contract with Meralco in 2019. “Assuming we don’t go out and continue to carry the cost,” said Ang.

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