Power industry restructuring
risk
The ongoing restructuring of the
Philippine energy and power sector,
discussed above, was not expected
to change Meralco’s status as a pri-
vately owned regulated monopoly
within its service territory.
However, increased competition in
the power generation sector as a
result of restructuring and privatisa-
tion could reduce the cost of elec-
tricity in other parts of the
Philippines, and lead to political
and regulatory pressure for Meralco
to lower its own electricity prices.
Financial projection risk
As in any other financial projec-
tions, the project company made
economic and technical assump-
tions that it believed to be reason-
able, but there were many
uncertainties and contingencies that
could cause actual results to vary
from forecasts.
Date-certain risk
The obligation of US Eximbank to
make the term loan at the end of the
construction period was subject to
construction completion, the satis-
faction of certain performance cri-
teria by the generation facility and
numerous other conditions prece-
dent by a defined Date Certain. If
those conditions had not been satis-
fied or waived by US Eximbank,
resulting in its refusal to make the
loan, and the company had not been
able to arrange alternative financ-
ing, an event of default under the
Common Agreement could have
been triggered and all of the credit
POWER PLANT
Exhibit 11.7
Manila Electric Company and subsidiaries
consolidated balance sheet, thousands of
Philippine pesos2001 2000 1999
Assets
Utility plants 77,680,674 71,935,103 66,443,812
Other property and equipment 12,523,605 12,204,999 7,822,128
Investments and advances 1,387,888 1,208,876 1,291,608
Land and development 1,583,679 1,482,602 6,263,097
Current assets
Cash and cash equivalents 2,965,904 5,374,345 2,131,081
Net receivables 30,384,321 23,196,452 16,565,589
Inventories 2,390,203 4,560,513 2,706,890
Other current assets 1,453,432 980,487 855,938
Total current assets 37,193,860 34,111,797 22,259,498
Other assets 14,329,556 15,798,545 8,561,852
Total assets 144,699,262 136,741,922 112,641,995Stockholders’ equity 2000 1999 2001
and liabilities
Stockholders’ equity
Preferred stock 863,175 830,189 804,121
Common stock 10,663,113 10,663,113 8,385,927
Capital in excess of par value 3,445,417 3,445,417 3,445,417
Subscriptions receivable -
common stock -170,570 -245,219 -574,175
Deposits on subscriptions
to preferred stock 155,235 211,132 220,681
Appraisal increase in utility
plant and others 25,577,873 24,075,364 21,727,718
Unappropriated retained earnings 15,350,745 19,387,242 18,578,223
Appropriated retained earnings 12,600,000 6,000,000 6,000,000
Total stockholders’ equity 67,884,988 63,767,238 58,587,912
Minority interest 3,039,258 3,806,803 3,497,538
Long-term debt,
net of current portion 26,707,827 28,738,480 17,951,993
Current liabilities
Notes payable 9,604,936 8,235,558 5,384,358
Accounts payable and
other liabilities 17,059,101 14,774,167 10,697,072
Income tax payable 24,339 83,642 191,328
Current portion of long-term debt 2,516,456 1,177,330 1,100,604
Total current liabilities 29,204,832 24,270,697 17,273,362
Deferred income tax 3,639,572 3,817,044 3,704,469
Customers’ deposits -
net of current portion 12,472,174 10,327,783 9,286,640
Operating reserves 1,750,611 2,013,877 2,240,081
Total stockholders’ equity
and liabilities 144,699,262 136,741,922 112,641,995