SEC to decide NSC fate by month’s end

The Securities and Exchange Commission (SEC) will decide by the end of this month whether to consider a lease proposal or proceed with the liquidation of National Steel Corp. (NSC).

SEC Chairwoman Lilia Bautista said the commission would look into the merits of the lease offer by a local steel company, Allengoal Steel Fabrication and Trading, as a possible means to maximize the use of NSC’s assets at its Iligan City plant.

Otherwise, the SEC would be compelled to push through with the liquidation plan that was approved last year and is gradually being implemented with the sale of some minor assets.

The SEC is also getting impatient with the insistence of NSC’s Malaysian owners, Hottick Investments Ltd., to bring the company back under rehabilitation since a "white knight" is allegedly set to infuse fresh capital into the debt-saddled company.

Bautista said, however, that NSC’s majority owners have not presented any "white knight" nor have they come up with an alternative rehabilitation plan acceptable to the SEC and the company’s creditors.

NSC’s creditors have agreed on the segregation of the company’s P28-billion worth of assets to pave the way for its liquidation. Once the country’s biggest source of semi-processed steel products, NSC was forced to shut down its operations in November 1999 after years continuing losses and failing to service its debts which have ballooned to P16 billion.

Allengoal president Alexander Delmo said their proposal "is the best way to develop an effective long-term solution to the problem of NSC and finally settle its obligations with its creditors."

Based on Allengoal’s lease-to-operate-and-maintain proposal submitted to NSC’s liquidator last January, Allengoal will restore, rehabilitate and maintain the Iligan plant facilities to operational readiness at no immediate cost to NSC.

Delmo pointed out that Allengoal has always been ready with its financial, technical and organizational resources to mobilize within days and upon approval of the lease contract.

The Allengoal official added that should an agreement from a long-term buyer to buy out NSC be forged, the company would be agreeable to a mutual pre-termination of the lease contract, subject to the full refund of the cost of rehabilitation, restoration and maintenance.

Allengoal is proposing a two-year renewable contract wherein it would be paying a monthly lease of P17.8 million for the operation of the hot mill, cold mill, electrolytic tinning line, billet, steelmaking plant and related facilities.

In addition, Allengoal may implement a profit-sharing scheme with NSC at a minimum of 40 percent of net profit (after deducting operating expenses, cost of money and taxes) immediately after the recovery of the restoration/rehabilitation costs shall have been completed or on the 13th month of the lease agreement, whichever comes first.