Creditors worried over lease-out plan for NSC

The National Steel Corp. (NSC) may soon start humming with business activity again as the lease-out plan mapped out by its liquidator is about to be implemented.

But the creditors of the cash-strapped steel firm are not excited. They are in fact worried that company will continue to fall apart if the prospective operator is unable to maintain its resting mills.

"Leasing the mills is not a guarantee that the assets of NSC will be preserved, considering that the creditors are anticipating an intended lessee whose financial and technical capacity is highly questionable," they said in a statement.

The creditors – Philippine National Bank (PNB), Land Bank of the Philippines (LBP), Global Bank, Equitable-PCI Bank, Credit Agricole Indosuez – urged the Security and Exchange Commission (SEC) to require the liquidator, Danilo Concepcion, to present to them first the prospective operator before allowing the steel firm to operate once more.

Industry sources said NSC will be lucky to get an operator who can see "in the corporate jungle a reason for survival."

"If the purpose of the steel firm is to operate just to make money for its maintenance, then it may be disappointed," a source said. "The economy now is not really a good host to such a business."

The economy, the source added, has been battered by high interest rates and a much depreciated peso, stifling the growth of the steel industry.

"The end-products of steel, such as appliances, cars, and construction materials, are all directly affected by the high interest rates since they are often purchased through credit schemes," the source pointed out. "Steel is also imported, making the peso-dollar exchange rate a crucial factor in its purchase."

On the other hand, Concepcion expressed optimism that the company has the means to recoup some of its losses and eventually be capable of maintaining itself provided a new operator is chosen now.

"It should be emphazied that the liquidator is trustee not only of the creditor banks. He is trustee as well of all the employees who have pending claims against the NSC running to almost P700 million," Concepcion said.