MRT3 owners open to a buyout

MANILA, Philippines – The private owner of the Metro Rail Transit line 3 (MRT3) said they are willing to sell their assets to the government through a compromise agreement.

“We’re willing to be bought out. But we have to talk. Buyer, seller, we have to talk,” said Robert John Sobrepeña, chair of the Fil-Estate group, one of the shareholders of the Metro Rail Transit Holdings (MRTH) II, the company that owns the Metro Rail Transit Corporation (MRTC). 

Metro Pacific Investments Corporation owns a 48% interest in MRTC, following an agreement with Sobrepeña’s Fil-Estate Corporation in November 2010. That agreement involves its interests and rights in Metro Rail Holdings Inc, Metro Rail Transit 2 Inc, and Monumento Rail Transit Corporation.

In 2010, the government paid MRTC P7.87 billion ($175.89 million*) worth of equity rental payment, maintenance costs, guaranteed debt payment, insurance expenses, and other fees.

In August, The Department of Transportation and Communications (DOTC) was hopeful it would reach a compromise with MRTC to move a step closer to a government takeover of the MRT 3 along EDSA.  

But Sobrepeña, who stepped out of the MRTC board in 2010, said the government needs to come to terms with the company’s private shareholders by agreeing to a compromise.

The compromise should include considering their proposals, Sobrepeña said. Between 2002 and 2010, they proposed to the agency adding more cars to improve MRT3, he added.

“If we don’t have a meeting of the minds, then we can discuss a possible buyout by government if they want to do it and spend all that money themselves,” Sobrepeña told Rappler.

During the hearing on Wednesday, October 1, Sobrepeña told senators that MRTC had sent proposals to DOTC as early as 1999. As their proposals “have not been acted upon,” MRTC cooperated with the Pangilinan-led MPIC to provide new train cars at no cost to government.

In 2012, DOTC rejected MRTC’s proposal, according to DOTC Secretary Joseph Emilio Abaya.

“We eventually rejected them through a letter in 2012. We clearly said to them we reject [their] proposal,” Abaya said and added the agency prefers a public bid than an unsolicited proposal.

Get your act together

Senators Francis Escudero and Grace Poe called to task DOTC Secretary Joseph Emilio Abaya and MRTC shareholders for a train that rammed out of the Taft Station in August, injuring at least 36 people.

This is the first time the DOTC officials and MRTC private shareholders were seated together after blaming each other in separate media encounters and being grilled in a public inquiry following the MRT3 derailment.

Previously, the MRTH said the government has to be in default first before it could invoke an equity value buyout (EVBO). An EVBO is a right given to MRTC in case government is unable to fulfill its obligations

David Narvasa, spokesperson of MRTH, previously said the P53-billion ($1.18 billion*) bid to buy the MRT3 falls short of the total equity value of the railway system.  

Abaya previously lashed out at the MRTH, saying if there is anyone whom the government should get in touch with, it would be MRTC’s Tomas de Leon, who is also the national director of the Land Bank of the Philippines.

Nine of the 14 board seats in MRTC are occupied by government shareholders, after a significant portion of bonds were acquired by Land Bank and the Development Bank of the Philippines.

 “We’re bound just to talk to MRTC. We’re not bound to reach out to all shareholders of MRTC. I think Mr De Leon is well represented,” Abaya told senators on Wednesday.

Sobrepeña said they have not received any offer or request from DOTC to discuss EVBO.

 “The truly private sector seats are the Fil-Estate seats,” said Sobrepeña, who added that it made no sense for DOTC to talk with its own kind, in this case, government shareholders. 

The senators told DOTC officials and MRT owners to get their act together as the continued spat between parties would not help improve passengers’ safety.

“Amid this labyrinth of ownership, it all boils down to the safety of our riding public,” Poe said. – Rappler.com

*$1=P44.91