LOPEZ-LED Energy Development Corp. (EDC) will settle a ¥22-billion loan from the Japanese government today, to assuage concerns among investors of too much exposure to yen debt.
EDC said in a statement the settlement of the company’s Miyazawa II loan would overhaul the currency mix of its debts. The company had already paid ¥12 billion in Japanese loans in 2009.
“Our investors have singled out the predominance of Japanese yen-denominated debt as a major concern because of our vulnerability to foreign exchange translation losses. Since taking over in 2008, we have fully addressed this concern with the successful redenomination of our debt stock to one that is now predominantly peso or 66% of total loans,” EDC President and Chief Operating Officer Richard B. Tantoco said in the statement.
After the settlement, yen loans of EDC will account for only 13% of total loans.
Mr. Tantoco said EDC’s income statement “will be more predictable as it is no longer subjected to large swings in the amount of unrealized forex losses or gains.”
The Miyazawa loan was taken out a decade ago when EDC was still a unit of state-owned Philippine National Oil Co.
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