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Fraport AG

Fraport's Bender Urges the Philippine Government to Honor Legal Contracts and Be a Reliable Partner

Frankfurt/Main, Germany (ots)

Fraport AG continues to work on
retransferring the Manila airport terminal project (International
Passenger Terminal 3) in tandem with a management contract.  Fraport
AG's executive board chairman Dr. Wilhelm Bender explained this today
in an interview with the Frankfurter Allegmeine Zeitung (FAZ),
Germany's authoritative national newspaper.  Bender further indicated
that Fraport AG would not tolerate being damaged by the Philippine
government's stance.
"The government is questioning the validity of contract agreements
that we signed with the previous government in 1999," said Bender. As
a result, the economic viability and funding of the project is no
longer possible. "Thus, the Philippine government will jeopardize
future privatization projects as well as the country's international
reputation as an investment location," said Bender.  "We will not be
afraid to bring the Philippine government back on the path of
honoring legal contracts and of being a reliable partner for this,
the biggest foreign investment project in the Philippines," Bender
continued.  Bender explained that the write down of about EURO 60
million made last year was just an accounting precaution of Fraport
AG. "This write down does not mean that we will give up a single cent
vis-à-vis the Philippines," Bender said. "Furthermore, we there is
no reason for us to make further write downs." Bender appealed to
the Philippines to continue negotiating on the previous basis and not
to announce a decision which will be detrimental to all parties
concerned.
Bender incidentally referred to the German-Philippine Investment
Guarantee Treaty, which provides investor protection for Fraport AG.
Note to Editors:
   The full text of Dr. Bender's interview in the FAZ follows.
Interview with Fraport AG's 
   Executive Board Chairman Dr. Wilhelm Bender
English translation of the interview published in today's edition
(25.10.02) of the Frankfurter Allgemeine Zeitung (FAZ), Germany's
authoritative national newspaper.
Fraport AG has put $378.8 million, including loan guarantees, into
the Manila airport project.   Are you any closer to a solution?
Bender:
   Since the summer we have found a basis of discussion with the
Philippine government.  This involves buying back the terminal and
thus retransferring the project in tandem with a management contract
for Fraport. We still regard this as being a suitable basis for
making progress in the project.
What are the major difficulties?
Bender:
   The major difficulties are actually the same old ones.  The
government is questioning the validity of contract agreements that we
signed with the previous government in 1999. There are four essential
elements, which place the financial viability of the entire project
in doubt. The first element is the $20 departure tax for passengers,
which is now supposed to be $11. Secondly, the vitally important
exclusivity of duty free sales in the international terminal is being
refused.  Thirdly, the relocation of Philippine Airlines to the new
terminal has become uncertain, and eventually the exclusivity of
international traffic at this terminal could slip away.  When all of
these elements are in jeopardy, this project is no longer
economically viable and thus cannot be financed. Thus, the
government would renounce its own original decision and that of the
previous government to run a privatization project.  This would
endanger future privatization projects.
Does this mean that if the status quo prevails Fraport will drop
out of the project?
Bender:
   No, for me "dropping out" is really the wrong expression.  I will
say this quite clearly:  Fraport will not tolerate being damaged by
acts of  whatever government. We will fight. We are preparing a
lawsuit as well as political measures via the German government. 
Furthermore, we are planning initiatives via international
institutions to make it crystal clear that the Philippine government
is on the way to endangering the country's international reputation
as an investment location.  Of course, we do not like doing this. 
However, if we are left with no other choice we will not be afraid to
do so in order to bring the Philippine government back on the path of
honoring legal contracts and of being a reliable partner for this,
the biggest foreign investment project in the Philippines.
What kind of lawsuit would it be?
Bender:
   It would be an "action for damages" that will protect us against
being ousted from a nearly completed terminal project.  Whoever
believes that it is possible to arrogate, without compensation, a
terminal that was financed primarily by us will cause damage to the
Philippines.  We have many possibilities to fight this.
Do you now have to make allowance for balance sheet adjustments,
after writing down about ¤60 million last year?
Bender:
   This write down does not mean that we will give up a single cent
vis-à-vis the Philippines. This was an accounting precaution of
Fraport AG, which in no way changes our legal position. In
addition, at this time there is no reason for us to make further
write downs. We know that the Philippine president has announced a
decision for October 30. I would like to take this opportunity to
appeal publicly to the Philippines to continue negotiating on the
previous basis and not to announce a decision on October 30, which
will be detrimental to all parties concerned. Incidentally, I refer
to the German-Philippine Investment Guarantee Treaty that protects us
as an investor.
Are there any potential, well-financed buyers for your 30-percent
share in the project?
Bender:  
   There are interested private investors, also in the Philippines. 
In consultation with the government, we have had discussions with
these investors.  If necessary, we will continue these discussions.
ots Original Text Service: Fraport AG
Internet: www.newsaktuell.ch

Contact:

Fraport AG Frankfurt Airport Services Worldwide
Attn: Robert A. Payne - Manager International Press
D-60547 Frankfurt am Main
Germany
Tel. +49/69/690'785'47
Fax +49/69/690'605'48
mailto:r.payne@fraport.de
Internet: http://www.fraport.com

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