Indian firm ups offer for Nat’l Steel to P12.25-B

Global Infrastructure Holdings Ltd. Inc. (GIHLI) increased its original purchase price for the National Steel Corp. (NSC) by P355 million and agreed to pay P1 billion up front for the debt-saddled steel company.

As negotiations intensified between GIHLI and NSC’s creditors, the Indian company poured more sweeteners into its offer and increased its original purchase price to P12.250 billion from P11.905 billion.

Land Bank of the Philippines president Margarito V. Teves said that GIHLI was willing to pay P1 billion upfront, instead of its original offer of P655 million.

Landbank is one of NSC’s major creditors, aside from the Philippine National Bank and Credit Agricole.

Teves said GIHLI’s offer sheet was now being discussed individually by NSC’s creditors before coming together to arrive at a final decision.

NSC’s creditors expressed optimism that the GIHLI deal could be concluded before the holidays although Credit Agricole was still lobbying to be bought out instead of waiting for the deferred payment of NSC’s obligations over a period of 8 years.

According to sources privy to on-going negotiations, Credit Agricole was actively participating in the on-going negotiations and was not expected to hamper or block the agreement.

One government source told reporters that the negotiations with GIHLI were proceeding without major stumbling blocks, making it unlikely for its sister company, the Netherlands-based LNM Group Holdings N.V., to be able to return into the negotiating table.

The source said that LNM, as well as other interested local groups, also made an offer to NSC but none of them came even close to the offer made by GIHLI. "They didn’t take us seriously and none of them made any serious offers," the source pointed out.

According to the source, NSC was spending at least P2 million every month just to maintain its facility in Iligan City and it was estimated to cost at least P15 million just to reopen the plant for operations.

PNB president Lorenzo Tan earlier said that NSC’s creditors were keeping their options open, although he said that GIHL had a 90-day exclusivity period within which to firm up the parameters of its offer sheet.

This meant that NSC has agreed not to open negotiations with other prospective buyers until it was certain that negotiations with GIHL will no longer move on.

"Only if things fall apart with GIHL will other parties be allowed to come in," Tan said. "Just the same, we are optimistic that the provisions we are asking for are doable."

LNM, in particular, is trying to expand its operations in South East Asia where its presence is so far limited to its 600,000-ton facility in Indonesia. Acquiring NSC would give it another 1.5 million metric tons of capacity.