CH wants to tap private banks to help restructure SRP loan-A A +A
Friday, March 21, 2014
THE Cebu City Government will tap a private bank to help it restructure the South Road Properties (SRP) loan, Mayor Michael Rama announced yesterday.
So far, the Philippine National Bank (PNB) has signified interest in being Cebu City’s partner in the restructuring of the loan.
Acting City Treasurer Diwa Cuevas said other banks have also called her for information on what the City wants.
Former councilor now Attorney V Jose Daluz III explained that the City is interested in applying for a loan with a private bank to pay off the City’s loan from the Japan International Cooperation Agency (JICA, previously JBIC or the Japan Bank for International Cooperation).
The loan is paid through a conduit bank, Land Bank of the Philippines.
But Daluz explained that the City is paying an 11-percent interest with Land Bank. If the City takes out a loan with a private bank, the regular interest rate is only between three and four percent.
Rama and Daluz found it frustrating that the balance from the principal amount of the loan is still P3.65 billion and the balance from the interest is still P1.15 billion. The loan amount was over P7 billion.
“So we are thinking of taking out a new loan, pay Land Bank and then pay for the loan with the regular three or four percent interest,” said Daluz.
But when asked if it should seek permission from the National Government, which is the guarantor of the loan, Rama asked why when it has never offered to help the Cebu City Government pay off the loan.
Rama said he will ask the Department of Finance (DOF) to remove the guarantee fund from the loan agreement because the SRP is already developed, which should be guarantee enough.
The City, through the SRP, is earning from three locators--Filinvest Land Inc. (FLI), SM Prime Holdings Inc. and Bigfoot Global Solutions.
Also yesterday, Rama said there will be no legal action against FLI.
He told reporters he had a “nice” conversation with FLI officials, including a representative of the Gotianun family and FLI first vice president for Visayas and Mindanao Tristan Las Marias.
FLI will turn over payment to the Cebu City Government next month. Rama, however, refused to say how much.
Rama wants to continue having a good partnership with FLI. He refused to pin the blame on FLI, saying the City was also remiss on some aspects, having been overtaken by events at the City Hall.
Published in the Sun.Star Cebu newspaper on March 22, 2014.