NSC sale not likely to get SPVA perks

The debt-for-equity swap between the National Steel Corp. and its bank creditors is not likely to qualify for incentives under the Special Purpose Vehicle Act (SPVA).

Sources said yesterday that the Bangko Sentral ng Pilipinas (BSP) is not inclined to qualify the transaction for tax breaks and other incentives because it is not a "true sale" of NSC’s bad debts.

NSC’s loans are registered as qualified bad loans under the SPVA registry of the BSP but the sale of the bad loans did not involve the creation of an asset management company since it was basically a partial bail-out by a new investor, the Global Infrastructure Holdings Inc.

Sources said the NSC has asked the BSP to allow its creditor banks to avail themselves of incentives including the staggered booking of the company’s losses arising from the sale of its bad loans.

The problem, however, is that the transaction was not a straightforward sale and might not qualify for these incentives, taking out one of the major sweeteners from the deal.

According to a bank official, NSC’s creditors are urging GIHLI to just reopen NSC and resume its operations while the incentives are being sorted out.

BSP sources said NSC’s application for SPVA incentives is still under review.

GIHLI had poured sweeteners into its offer for NSC and increased its original purchase price from P11.905 billion to P12.250 billion, an offer that ultimately compelled the creditors to enter into an agreement with the group.

Sources earlier said NSC is spending at least P2 million every month just to maintain its facility in Iligan City while the amount needed just to reopen the plant is estimated at P15 million.

NSC was supposed to have been liquidated years ago but it was ordered revived by President Arroyo who made a campaign promise to reopen the plant in Iligan City where she grew up.