SEC asked to consider new bid to operate NSC

The fate of National Steel Corp. (NSC) appears uncertain as yet another lease proponent has reportedly made a bid to operate the steel firm, ahead of an impending Securities and Exchange Commission (SEC) decision to proceed with the company’s liquidation.

SEC Chairwoman Lilia Bautista said the creditor banks of NSC have requested that the commission allow the lease proponent – a foreign-based company with local partners – to submit its proposal no later than May 23.

This latest development came as the SEC is set to decide by the end of this month whether to consider a lease proposal or proceed with NSC’s liquidation.

The SEC approved last year the liquidation of NSC’s P28-billion worth of assets to settle outstanding claims of about P16 billion mainly from a consortium of bank creditors.

The liquidation program followed a series of failed bids and negotiations, primarily on the side of NSC’s majority owners Hottick Investments Ltd. of Malaysia, in finding a "white knight" that would infuse fresh funding to jumpstart the company’s rehabilitation.

In the meantime, the SEC is studying the merits of the lease offer that has been submitted 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 and prevent the asset liquidation.

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.

Allengoal officials said 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.