Asian Hospital’s P1.86-billion loan okayed

ASIAN HOSPITAL, Inc., owner and operator of Asian Hospital and Medical Center in Alabang, will enter into a loan agreement with International Finance Corp. and Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG) for new loans amounting to P1.855 billion. The amount, the company said, would be used to fund its expansion program and refinance existing debts. In a letter to the Securities and Exchange Commission, Asian Hospital said the authority to enter into a loan arrangement was approved by its board of directors in a meeting held on Jan. 25. The board also authorized the issuance of 312.28 million additional common shares out of the unissued authorized capital stock of the corporation in the amount of P1.13 per share or a total of P352.88 million. This issuance is "conditional on the commitments" by the lenders under the loan agreement and subject to the exercise of preemptive rights by all stockholders of the corporation as of Jan. 15. "The condition imposed for obtaining the new loans is the infusion of additional equity into the corporation as a key source of additional funds for the expansion program," Asian Hospital said. Neptune Stroika Holdings, Inc., a stockholder of Asian Hospital, will subscribe to all the additional shares not taken up or subscribed to by other existing shareholders of the corporation. Neptune Stroika owns 12.8% of the corporation. Lead arranger In its Web site, IFC, the private sector arm of the World Bank Group, said it was going to extend to the hospital a P1.26-billion loan. "IFC has been invited by Asian Hospital to be the lead lender and arranger for the project and provide a peso denominated loan of up to P1.260 billion," IFC said. In 2001, IFC invested $25 million in Asian Hospital for the construction and operation of the 247-bed private tertiary hospital. IFC said that the hospital "has reached or is quickly reaching" its effective capacity in several service areas. "To address this, it is planning to enhance its operations and expand its outpatient and inpatient facilities," IFC said. It added that the hospital "plans to normalize its debt structure through the refinancing of the majority of its existing debt," adding that the project is estimated to cost P3.06 billion. "Bumrungrad International Ltd. will participate in the equity financing for the project," IFC added. Through its subsidiary Bumrungrad International Philippines, Inc. (BIPI), Bumrungrad International has a contract to manage the hospital. BIPI is the largest shareholder in Asian Hospital with a 32.7% stake. Besides BIPI and Neptune — which is also 40% owned by Bumrungrad International — other investors are Insular Life (15.4%), the Filinvest group (9.0%), Healthcare Delivery Systems (3.6%), and a group of individual doctors led by one of the hospital’s founders, George Garcia. Mr. Garcia holds a 10.7% stake in the hospital. Asian Hospital said it would use the money raised to fund its P740-million capital expense program for 2008 and 2009. "The first phase [of the program] will focus on expanding the outpatient capacity and room conversion to increase private single rooms with estimated cost at P158 million," it said. Phase two, meanwhile, will add a hospital tower and capacity for outpatient as well as for inpatient facilities. Construction will start in the third quarter and be completed by early 2010. Asian Hospital and Medical Center is the first major private hospital with tertiary care facilities in the southern Luzon corridor of metropolitan Manila. It officially began operations on March 15, 2002. The 253-bed capacity, state-of-the-art medical center stands on a 17,258-square-meter campus that houses the main hospital and the medical office building. It has over 900 employees and 160 outsourced staff. DEG, a member of KfW Bankengruppe (KfW banking group), is one of the largest European development finance institutions for the promotion of the private sector. — R.A.M. Rubio, BusinessWorld