LNM pushes counter-offer for National Steel

LNM Holdings is making one last ditch appeal to the Department of Trade and Industry (DTI) to convince the creditor banks of the National Steel Corp. (NSC) to give LNM a chance to present its counter-offer for the mothballed steel firm.

In a letter to Trade Undersecretary Gregory L. Domingo, Eric D. Tierie, general manager for marketing of LNM Holdings N.V., expressed the LNM Group’s dismay over what it perceives may be "political pressure" to conclude a deal with Global Infrastructure Holdings Ltd. even as two of creditor banks, namely China Bank and Credit Agricole Indosuez, are opposed to the deal.

Tierie complained that the evaluation of the original bids for NSC was neither complete nor just.

He pointed out that LNM was made to believe that there would be a dialogue with the creditors about the details of the bid. "Unfortunately LNM was never given a chance to explain their bid, especially the profit-sharing scheme, and were instead surprised to find out that the creditor banks had agreed to a 90-day exclusive negotiation with GHL," Tierie said.

With the 90-day exclusivity period about to end, Tierie said, the LNM Group is demanding "a fair chance" to present and explain its bid and revitalize NSC.

Tierie lamented the fact that two of the biggest creditor banks, the Philippine National Bank and Land Bank of the Philippines, are the ones who are pushing for the conclusion of the deal with GIHL even though not all of the banks are in agreement.

Tierie stressed that a comparison of their offer with that of GIHL would show that LNM’s offer is superior.

He warned the banks that "after two failures (in revitalizing the NSC), it would be an irresponsible decision to take yet again a risk with NSC’s revitalization especially if the alternative is to get more money sooner with better guarantees."

LNM is offering a cash upfront of P2.5 billion against GIHL’s P1 billion.

LNM’s a annual payment would carry a full guarantee and 10 percent more than that given by GIHL which is only extending a limited guarantee.

GIHL, Tierie pointed out, has no experience in rehabilitating foreign steel plants while the LNM already has extensive and proven success in steel plants all over the world.

LNM’s investment and working capital in NSC for this year alone would be approximately $70 million as compared to GIHL’s $25 million.

The LNM Group would also be able to provide NSC the needed synergy with its global holdings as against GIHL which operates only in India.