NSC may go back to liquidation mode

The government may be forced to go back to "square one" in its effort to resolve the fate of National Steel Corp. (NSC) even as bids are expected to be received for the lease of the steel firm’s Iligan plant.

Securities and Exchange Commission general counsel Eugenio Reyes said the liquidation plan for NSC will remain in effect while the lease proposals are being reviewed by the NSC evaluation committee which is composed of representatives from the Department of Trade and Industry, the SEC, SEC-appointed liquidator and the creditor groups.

The DTI-led committee set the deadline for the submission of offers yesterday. As of press time, there had been no reports on who presented lease offers. Four groups have submitted offers to operate the facilities of NSC. They are Allengoal Steel Corp., Cathay Pacific Steel Corp., Glencore Far East Philippines AG of Switzerland, and an unidentified European company which has already established presence in the Philippines.

Reyes said Allengoal and Glencore do not seem inclined to participate in the bidding. Bids that will be submitted will be evaluated based on two aspects: the technical and financial feasibility. Hence, there is no assurance that a winning party may merge if the terms of the offer would not meet the conditions set by the evaluation committee.

"In that case, NSC will revert back to liquidation, which is being implemented right now," Reyes said. "It’s back to where we started."

Earlier, the SEC rejected Allengoal’s proposal to approve a modified offer of an "improved lease contract" wherein it committed to mobilize and operate the plant facilities within 48 hours upon concurrence of the SEC

"It’s not as simple as that. It will still have to go through a process that includes consultation with the liquidator and the creditors," Reyes said.

Under the lease project, the financing, rehabilitation, operation and management of NSC’s Iligan plant will be carried out by the winning proponent.

Late last year, the SEC ordered the liquidation of NSC after the company’s receivership committee and the Malaysian majority owners Hottick Investments Ltd. failed to draw up a rehabilitation plan agreeable to the company‘s creditors as well as attract a "white knight" who would infuse additional capital into the debt-laden steel firm.

The Iligan plant was closed down after continued losses, exacerbated by the dumping of cheaper products mainly from Russia. NSC was eventually forced to seek the SEC’s help for debt relief on its outstanding loan of over P16 billion.