National Steel Corp. (NSC) may have found its white knight in a consortium of local and foreign investors led by Grupo F. Jacinto (GFJ) which has the financial muscle to put up an initial cash infusion of $40-$50 million in exchange for a 51-percent equity in the steel firm.
In a letter to the interim receiver committee of NSC which was appointed by the Securities and Exchange Commission (SEC), GFJ president Jose Ma P. Jacinto has proposed several measures to rescue the Iligan-based steel firm which has piled up debts of close to P16 billion.
The consortium members, which include Bacnotan Steel, Puyat Steel, some members of the Filipino Galvanizers Institute, an alliance of investors from Singapore and Hong Kong, are reportedly drawing up a rehabilitation program for NSC.
Jacinto said the consortium has recommended the following measures to restart the operations of NSC and prevent the deterioration of its plant and equipment:
* Separate products into two groups: round and flat. Round group will take over furnace and billet operation and flat group will replace cold-rolling and tinning operations.
* The new partners, which will contribute $30-$50 million in working capital, can become lead-participants owning 51 percent of a corporation with the specific purpose of managing and taking over cold-mill and tinning operations.
* For the round products, another corporation can be formed to accommodate offtakers interested to resume operations of furnaces and billet machinery. This group will enter into an arrangement through the receivership committee with the leader-participant contributing a substantial working capital for raw material purposes.
As a long-term solution for NSC, the consortium is proposing the establishment of an integrated steel mill to ensure cheaper source of raw materials. A long-term supply contract from the steel mill facility will assure the viability of NSC.
Jacinto said that inviting investors to resolve issues of NSC at this stage is not likely and impractical for the short-term since non-chattel assets have to be reconciled with the banks. He said only chattel assets could be foreclosed with finality so that these machineries could immediately be transformed into performing assets with the foreseeable start-up operations for early next year.
The foreign members of the consortium, Jacinto said, could prevent possible foreclosure by paying off its creditors and buying their IOUs worth an estimated P11 billion at a discount. Later, GFJ's foreign partners can convert their receivables into NSC equity.
NSC, still owned by Hong Kong-based Hottick Investments Ltd., has said it has assets worth around P20 billion.
The company's debt relief covers P15.4 billion in outstanding debt.