NSC rescue by Arab-Chinese group doubtful — SEC source

The National Steel Corp. (NSC), mired in an economy suffering from an image problem abroad, is not likely to be able to operate again in the next two or three years, a source at the Securities Exchange Commission (SEC) said yesterday.

The source, speaking on condition of anonymity, said the so-called "saviors" of the cash-strapped steel firm reportedly led by an Arab-Chinese group "are just all sound and fury signifying nothing."

"If you are a foreign investor in your right mind, will you invest in a steel firm like NSC plagued by all kinds of problems imaginable?," the source asked. He pointed out that the economy, shaken by high interest rates and a weakening peso, cannot be a good host to a fully-operational steel firm.

"The resources used in the manufacture of steel are imported and since they are, their production will unreasonably cost foreign investors a lot," the source said.

"And if ever it gets to produce some steel against all odds, the firms which create the end products of steel like appliances, cars, etc. cannot buy from NSC because the demand for these (end products) is shrinking," he added.

He said the economy is obviously contracting and that investments, both local and foreign, are hard to come by.

Because of this, he added, unemployment rises, decreasing the demand for products and services, "including the end-products of steel."

SEC Chairman Lilia Bautista said last week that the debt-ridden steel firm will be acquired by six foreign investors led by an Arab-Chinese group reportedly oozing with cash. Most of them seem undaunted by NSC’s liabilities now estimated at around P16 billion, she said.

The foreign investors expressed their interest in buying the steel firm in the wake of the liquidation order made by Bautista almost three weeks ago.

Bautista said the order to liquidate the steel firm met stiff opposition from Hottick Investments Ltd., the majority shareholder of the beleaguered steel firm. The latter even threatened to drive overseas Filipino workers out of Malaysia in a bid to block the liquidation plan.

Bautista, however, maintains that the liquidation of NSC is in accordance with what the law dictates if the tottering steel firm cannot find a so-called white knight to save it from insolvency.

"I’ve given them almost a year to present to the agency a credible investor, but they did not," she told reporters last week.