Maynilad, Manila Water bankruptcy feared if extension talks fail

MANILA, Philippines (UPDATED) – Maynilad Water Services and Manila Water may declare bankruptcy if they do not find a solution with the government over the extension of their concession agreement until 2037.

"If they cancel the extension, bankrupt ang dalawang kumpanya (the two companies will go bankrupt). Under our loan covenants, any material change in the contract will automatically make the loans due and demandable," said Maynilad vice chairman Isidro Consunji.

According to Consunji, Maynilad's loans that will be maturing beyond 2022 amount to P42 billion.

The companies previously said in congressional hearings that they have loans maturing beyond 2022 – the original year the concession agreement would end – since the Arroyo administration extended the contract in 2009, to until 2037.

In a separate disclosure to the Philippine Stock Exchange, Metro Pacific Investments Corporation (MPIC) said the shortening of the concession term prevents Maynilad from starting new projects.

MPIC holds a controlling stake in Maynilad, with DM Consunji Incorporated (DMCI) as its partner.

"Maynilad, however, remains hopeful that the renegotiation of the concession agreement will result in a satisfactory resolution of the various issues for all the stakeholders," MPIC said.

For now, several Maynilad projects worth P30 billion have been suspended, as parties try to resolve the matter.

The Metropolitan Waterworks and Sewerage System announced last Wednesday, December 11, that the extension of the concession agreements has been revoked.

The Department of Justice said the extension had no legal basis.

The issue has sent stocks of Manila Water, DMCI, and MPIC to a near-decade low. – Rappler.com

Editor's Note: The disclosure to the Philippine Stock Exchange was previously attributed to DMCI, instead of MPIC. We regret the error.