Power utility giant Manila Electric Company (Meralco) is seeking tenders for another round of refinancing arrangement covering some P11 billion worth of outstanding loans.

In an exclusive interview, Meralco first vice president and treasurer Rafael L. Andrada disclosed that they already sent out request for proposals (RFPs) to banks, and that company decision is due in the coming weeks.
“We sent out RFPs last week. We’re looking for better terms that the banks can give us,” he said.

The loans set for refinancing are those with BDO and Bank of Philippine Islands (BPI), which are due to mature in four years.

“We just want to establish a new benchmark given the positive developments in the regulatory environment,” Andrada said, adding that the newly-injected stability in the company’s cash flow will expectedly give it “a better credit outlook.”

The refinancing plan opts to corner better terms as far as stretching the maturity of the company’s loans, Meralco officials indicated.

Andrada noted that with a more predictable and relatively stable cash flow, the utility firm is also gaining leverage to manage outstanding loan obligations.

Just last month, the company has drawn five-year floating P3.0 billion long-term loan from Unionbank for the refinancing of loans scheduled to lapse next year.

It has also converted P2.715 billion to a fixed rate tranche payable in January 2014, while another P2.285 billion was converted into a floating rate tranche payable in January 2010.

After some years of battering on the financial front due to regulatory lag and series of refund to customers, Meralco’s long-time bid for rate adjustment finally came in May this year following the Energy Regulatory Commission’s final go-signal on the implementation of its performance-based regulated rates. In the first nine months, the utility firm logged P5.3 billion net income which is a reversal of a constrained profitability it has been experiencing in the previous years.