NSC liquidator asks SEC for more time

The government-appointed liquidator of National Steel Corp. (NSC) is asking the Securities and Exchange Commission (SEC) for more time to get creditors to approve a new proposal.

NSC liquidator Danilo Concepcion told reporters that he has requested the commission for another two months within which banks could study the proposal and get the approval of their respective boards of directors.

According to Concepcion, NSC’s creditors are now in the process of evaluating a proposal that will be presented to Pengurusan Danaharta Nasional Bhd of Malaysia which holds the shares formerly owned by the Malaysian company, Hottick Holdings Inc.

Concepcion said the original proposal involved the creation of a special purpose company where NSC’s creditors would hold controlling 80-percent stake while Danaharta would hold the remaining 20 percent.

However, this proposal was thumbed down by Danaharta; forcing NSC to come up with new terms that would be acceptable to both its creditors and the Malaysian government.

"But before we can even present these new terms to the Malaysian government, we have to get the approval of all the banks involved," Concepcion said. "They all have to go back to their boards for approval and this could take easily two more months."

NSC’s biggest creditor is the Philippine National Bank, followed by Credit Agricole which Concepcion said has to go back and forth between its regional and main offices to arrive at any decision.

When NSC succeeds in getting its creditors to approve the proposal, only then can it present the proposal to Danaharta, together with Trade and Industry Secretary Manuel Roxas II who is brokering the deal.

Hottick invested P800 million in NSC when it bought into the company. This investment is now worth P40 billion but NSC is also standing on top of a gargantuan debt.

The Department of Trade and Industry earlier met with Malaysian officials in an attempt to convince them to write down part of Malaysia’s exposure in the company through its rehabilitation agency, the Pengurusan Danaharta Nasional Bhd.

NSC’s creditor banks have been clamoring for the SEC to order the liquidation of NSC’s assets but most of them remain open to the possibility of rehabilitation if the government could talk Danaharta into writing down its exposure and reducing the company’s total debt burden.

The SEC said the main stumbling block to liquidation is that banks have to pay at least P1 billion in fees and charges just to be able to unload NSC’s salvageable assets.

Danaharta took over the holdings of the Hottick-Renong group in NSC last year when it failed to pay a 3-billion-ringgit loan from Malayan Banking, RHB Bank, Bank Bumiputra and Commerce Assetholding Bhd. Hottick-Renong used the loan to bail out the original Malaysian owners of NSC, the Westmont group.

NSC’s Philippine creditor-banks, which have a loan exposure of roughly P16 billion in NSC, are more inclined to just sell off NSC’s salvageable assets before they are completely depreciated from non-use.