EDC 2014 SR (UPDATED)

EDC 2014 Performance Report
EBWPC Loan
On October 17, 2014, EDC has secured $315.0 million loan for Burgos Wind Project (Commercial
Debt Facility ₱5.17B, ECA Debt Facility US$139M, Commercial Debt Facility US$35.5M). This
is a financing facility for the construction of the 150-MW Burgos Wind Project (BWP) in Ilocos
Norte. The facility which consists of US dollar and Philippine peso tranches will mature in 15
years. Portion of the proceeds received from the financing facility was used to settle the
outstanding bridge loans in October 2014. Total borrowing costs recognized on this amounts to
₱83.7 million.
Under the agreement of the EBWPC’s Project Financing, EBWPC’s debt service is guaranteed by
the EDC.
In the last quarter of 2014, EBWPC entered into four (4) interest rate swaps (IRS) with aggregate
notional amount of US$150 million. This is to partially hedge the interest rate risks on its ECA
and Commercial Debt Facility (Hedged Loan) that is benchmarked against US LIBOR and with
flexible interest reset feature that allows EBWPC to select what interest reset frequency to apply
(i.e., monthly, quarterly or semi-annually). As it is EBWPC’s intention to reprice the interest rate
on the Hedged Loan semi-annually, EBWPC utilizes IRS with semi-annual interest payments and
receipts.
FG Hydro Loan
On May 7, 2010, FG Hydro signed a 10-year ₱5,000.0 million loan agreement with PNB and
Allied Bank, maturing on May 7, 2020. The loan is secured by a real estate and chattel mortgages
on all present and future mortgageable assets of FG Hydro. The loan carries an interest rate of
9.025% subject to repricing after five years. Loan repayment is semi-annual based on increasing
percentages yearly with the first payment made on November 8, 2010. The loan proceeds were
used to finance the full payment of the Deferred Payment Facility and the PRUP, and fund general
corporate and working capital requirements of FG Hydro.
On November 7, 2012, FG Hydro’s outstanding loan amounting to ₱4,300.0 million was
restructured by way of an amendment to the loan agreement. The amended agreement provided
for a change in the determination of the applicable interest rates and extended the maturity date of
the loan by two years with the last repayment to be made on November 7, 2022. FG Hydro has
the option to select its new applicable interest rate between a fixed or a floating interest rate. FG
Hydro opted to avail of the loan at the floating rate which is the higher of the 6-month PDST-F
rate plus a margin of 1.50% per annum or the BSP overnight rate plus a margin of 1% per annum
as determined on the interest rate setting date. For the first interest period, the applicable rate was
determined as the BSP overnight rate of 3.5% plus 1% margin. The principal and interest on the
loan are payable on a semi-annual basis. Interest rates are determined at the beginning of every
interest period. FG Hydro has a one-time option to convert to a fixed interest rate any time after the
amendment effectivity date.
FG Hydro has assessed that the loan restructuring resulted to substantial modification of the terms
of the original loan,hence, the original loan was considered extinguished. Amortization of the
remaining transaction cost of the old loan amounting to ₱52.2 million was accelerated and the
transaction cost incurred for the restructured loan amounting to ₱21.3 million was recognized as
part of the loss on extinguishment of debt (see Note 26).
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