Dutch firm offers P2-B upfront to restart NSC

The Netherlands-based LNM Group said it is willing to provide an upfront cash infusion "in excess of P2 billion" to rehabilitate and restart the National Steel Corp. (NSC) if it reaches a deal with the creditor banks of the mothballed steel firm.

LNM Holdings N.V. marketing general manager Eric D. Tierie was in Manila recently to reiterate the group’s continuing interest in NSC even though negotiations with another bidder, Global Infrastructure Holdings Ltd. Inc. (GIHLI) appear to be progressing well.

GIHLI had reportedly sweetened its offer for NSC by raising its total bid for the Philippine steel firm to P12.25 billion, from an original P11.905 billion.

GIHLI had also offered to give an upfront cash of P1 billion to restart NSC as soon as it reaches a deal with the banks.

Still, LNM remains interested in NSC, Tierie said, adding: "We are still not giving up on our desire to negotiate." However, the LNM Group is respecting the "exclusivity" the banks had granted to GIHLI which will expire by January next year.

The LNM Group’s continuing interest, Tierie pointed out, is probably the reason why GIHLI decided to sweeten its offer. As such, Tierie said, the banks are happy that LNM is still around.

Tierie noted that "by not stepping out, we are doing the banks a favor."

His meeting with various members of the creditor banks, Tierie clarified, was "not to negotiate, but to reaffirm our intentions."

The creditor banks, for their part, Tierie said, "had no reason to discourage us."

The LNM Group’s interest in NSC is such that, according to Tierie, even if the creditor banks do reach a deal with GIHLI to take over NSC, the LNM Group would still be around especially if GIHLI is not successful in turning NSC around.

"If GIHLI fails in two to three years, we will still look at it (NSC)," Tierie assured.

The LNM Group, Tiere stressed, has a proven global network and record of acquiring and rehabilitating troubled steel plants.

GIHLI, Tierie said, has no foreign steel plants and operates only in India. GIHL, according to Tierre, is not even ranked in the Top 30 steel firms in the world. The LNM Group is currently ranked No. 2 and expects to take the No. 1 slot next year with its acquisition of steel plants in Poland and Hungary.

As such, Tierie warned, acquiring and turning NSC around for GIHLI would be its first experience.

"For Global, it would be an experiment," Tierie said.

The LNM Group, for its part, is confident that in just one year it can bring up NSC’s output to 800,000 tons and by the second year meet NSC’s rated production capacity of 1.5 million tons.

Tierie commended the care in mothballing NSC. He noted that if the steel firm had not been properly mothballed, "they would have destroyed the value of the plant."

The LNM Group’s interest in NSC, Tierie explained, is based on its belief that "the Philippine economy in the next five years will improve."

Likewise, Tierie said, the LNM Group is impressed by the level of skill of Filipinos.

The English skill of Filipinos would also help LNM in turning NSC around.

And lastly, Tierie said, "we want to grow in Asia in a rapid and controlled manner and we want to make NSC a true member of our worldwide plant."