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News Feb 22, 2016

Shearman & Sterling Advises Light Rail Manila Corporation on the P65 Billion (US$1.4 Billion) LRT 1 Cavite Extension Project

Shearman & Sterling advised Light Rail Manila Corporation (“LRMC”) on the development and financing of the Light Rail Transit 1 Cavite Extension project (LRT 1 project).  The sponsors for the project are Metro Pacific Investments Corp, Ayala’s AC Infrastructure Holdings and Macquarie Infrastructure Holdings. The total project cost is P65 billion (approximately US$1.4 billion), of which P24 billion (approximately US$504 million) will be financed by way of a limited-recourse loan from the bank market. The successful closing marks one of the largest infrastructure project financings in the Philippines to date.

On February 11, 2016, LRMC signed a P24 billion, 15-year Omnibus Loan and Security Agreement (“Loan Agreement”) with a syndicate of Philippines banks including Metropolitan Bank & Trust Co., Security Bank Corp. and Rizal Commercial Banking Corp.  LRMC also signed an EPC agreement with France’s Bouygues Travaux Publics and Alstom Transport for the LRT 1 project on the same day.

As part of the LRT 1 project, LRMC will operate and maintain the existing LRT Line 1 and construct an 11.7-km extension from the present end-point at Baclaran to the Niog area in Bacoor, Cavite.  A total of eight new stations (Aseana, Manila International Airport, Asia World, Ninoy Aquino, Dr. Santos, Las Piñas, Zapote and Niog) will be built along this route covering the cities of Paranaque and Las Pinas, up to Bacoor, Cavite. Construction is due to start once the DOTC and the Light Rail Transit Authority delivers the right of way, which is earmarked for June this year.

Launched in 1987, the LRT 1 line is Metro Manila’s oldest elevated railway, originally spanning Monumento to Baclaran. The line was extended to Roosevelt in Quezon City in 2010. The extended rail line will help the transportation needs of tens of thousands of commuters from the high-growth area of southern Greater Metro Manila and is part of the solution to Metro Manila’s worsening traffic conditions.

The Shearman & Sterling team was led by partner Bill McCormack (Singapore-Project Development & Finance) and included counsel Anna Chung (Singapore-Project Development & Finance) and associate Chad Passlow (Singapore-Project Development & Finance).