Authorizing The Implementation Of The Equity Value Buyout Of The Metro Rail Transit Corporation And Prescribing Guidelines Therefor

MALACAÑAN PALACE
MANILA

BY THE PRESIDENT OF THE PHILIPPINES

EXECUTIVE ORDER No. 126

REPEALING EXECUTIVE ORDER NO. 855 (S.2010) AND AUTHORIZING THE IMPLEMENTATION OF THE EQUITY VALUE BUYOUT OF THE METRO RAIL TRANSIT CORPORATION AND PRESCRIBING GUIDELINES THEREFOR

WHEREAS, the Government, through the Department of Transportation and Communications (DOTC), entered into a Build-Lease-Transfer Agreement (BLT Agreement) with Metro Rail Transit Corporation (MRTC) for the construction of the EDSA Light Rail Transit Phase I (otherwise known as the MRT Line 3);

WHEREAS, about 77% of the original shareholders of MRTC securitized their interest over Equity Rental Payments (ERP) under the BLT Agreement, thereby divesting their economic interest in MRTC, in the form of MRT3 Notes and preference shares;

WHEREAS, in 2008 and 2009, MRTC issued Equity Value Buyout (EVBO) Notices to DOTC pursuant to Section 7.7 of the BLT Agreement requiring the Government to purchase MRTC’s right, title and interest in MRT Line 3;

WHEREAS, in January 2009, MRTC filed an arbitration case in Singapore against the Republic of the Philippines due to, among others,...

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Summary of Executive Order No. 126

Repealing Executive Order No. 855 and Authorizing the Implementation of the Equity Value Buyout of the Metro Rail Transit Corporation

- Directs the implementation of the Equity Value Buyout (EVBO) of the Metro Rail Transit Corporation (MRTC) pursuant to the Build-Lease-Transfer (BLT) Agreement for the MRT Line 3 project. (Section 1)
• The EVBO implementation includes:
- Acquisition of all outstanding shares, securities, and/or rights, title and interests of MRTC in the MRT Line 3 project through equity or asset purchase. (Section 1a)
- Execution of a Compromise Agreement between the Government and MRTC, and submission to the Arbitration Committee in Singapore. (Section 1b)
- Settlement of local tax liabilities of MRTC, to be borne by the Government under the BLT Agreement. (Section 1c)
- Termination of the BLT Agreement. (Section 1d)

- The DOF, DOTC, DBP, and LBP shall decide on proceeding with equity or asset purchase, and the cost of implementing the EVBO in accordance with the BLT Agreement. (Section 2)
• The DOF shall proceed with the purchase and retirement of all outstanding notes, shares, securities or assets. (Section 2)
• Financial, legal and technical advisors may be engaged by the DOF. (Section 2)

- The DOTC and OSG shall enter into a Compromise Agreement with MRTC without admission of fault by the Philippines, and submit it to the Arbitration Committee in Singapore for dismissal of the arbitration case. (Section 3)

- The DOF, DOTC, OSG and DBM shall recommend to the Office of the President the mechanism for settlement of local tax liabilities of MRTC as permitted by law. (Section 4)

- The DOF, DOTC and OSG shall review related agreements and recommend termination of the BLT Agreement, considering legal and financial aspects. (Section 5)

- The DOF, through the Secretary of Finance, is authorized to raise funding through new domestic or foreign borrowing to carry out the EVBO and its components, subject to requirements for Government borrowings. (Section 6)

- All concerned government agencies and instrumentalities are directed to provide full support and cooperation for successful implementation of the EVBO. (Section 7)

- Separability clause for provisions declared invalid or unconstitutional. (Section 8)

- Repeals Executive Order No. 855 (s.2010) and other inconsistent orders, rules, regulations and issuances. (Section 9)

- Effectivity clause for immediate implementation. (Section 10)