Tuesday, March 16, 2010

San Miguel eyes Caticlan airport project

Firm to buy 51% stake of George Yang’s group

MANILA, Philippines--San Miguel Corp. has gained a foothold into a pioneering airport development business by taking a majority stake in the modernization of the Caticlan airport, the gateway to the country’s world-famous beach spot Boracay Island.

Inquirer sources said San Miguel had agreed to come in as a strategic partner of the consortium led by Chinese-Filipino businessman George Yang that bagged the right to modernize the Caticlan airport under a 25-year concession arrangement with the government.

San Miguel is expected to sign an agreement to buy a 51-percent interest in Yang-led Caticlan International Airport Development Corp. (CIADC) anytime this week, a source familiar with the matter told the Inquirer. The conglomerate was invited to participate in the much-awaited project by Yang himself and the partnership deal had been in the works for many months now.

CIADC’s Caticlan project is touted as the first ever privatization of an airport terminal in the Philippines. At the same time, it is in line with San Miguel’s diversification into the infrastructure business and recent foray into leisure estate development in Boracay.

The modernization of the Caticlan airport alone is worth around P2.5 billion, based on the framework approved by the National Economic and Development Authority. But the project also has a commercial component that entails the development of a 16-hectare property beside the airport. This peripheral project is estimated to cost P10 billion.

The upgrading involves the construction of a bigger airport passenger terminal, extension of the existing runway from 950 meters to 2,100 meters to accommodate bigger aircraft, improvement of the road network, and upgrading of airport facilities and air traffic control aids. The proponents have also committed to build other support utilities, install fire-fighting equipment and construct a diversion road.

The project is based on a build-rehabilitate-operate-transfer agreement. CIADC has up to seven years to build and expand the airport and 25 years to operate the facilities. All revenues will go to CIADC except for earnings from the operation and maintenance of navigation systems, which would go to the Department of Transportation and Communication.

The modernization work on the Caticlan airport started last January. Once finished, CIADC expects fares to be more competitive for passengers since airlines can use aircraft with more seating capacity than the turbo-propellers that are mostly being used today. A modernized Caticlan airport is also targeted to serve as an international gateway not only to Boracay but also to the rest of the Visayas.

Yang, who holds the master franchise for American fast-food giant McDonald’s in the Philippines, also has some real estate investments in Boracay.

San Miguel, through its property arm San Miguel Properties Inc., is also breaking into Boracay’s booming tourism after recently acquiring a 28-hectare property targeted for leisure development.

SMPI’s Boracay property is adjacent to the plush Shangri-La hotel and is now being planned for development into a residential condominium complex.

No comments:

Post a Comment