SEC chairperson Lilia R. Bautista said while they are not opposed to the planned lease of the debt-strapped steel firm to GIHL, the terms of the agreement have yet to be scrutinized by the commission.
The agreement calls for the lease of the NSC plant in Iligan, with an option to purchase it in three years’ time.
Although GIHL had already won the bidding, NSC creditors are asking for more concessions, specifically the grant of a shorter period for the repayment of loans. The agreement provided for a 10-to 12-year repayment period, but creditors want it reduced to as short as seven years.
At present, NSC’s creditors are spending between P5 million to P10 million a month just to maintain the steel plant. Funding for maintenance expenses mainly comes from the proceeds of the insurance taken out on the plant.
Danaharta Nasional Berhad, which used to own majority of NSC, secured a provision that would require the creditors to seek its consent on major initiatives aimed at rehabilitating the steel plant.
Among NSC’s creditors are Landbank of the Philippines, Philippine National Bank, Credit Agricole Indosuez, China Banking Corp., Rizal Commercial Banking Corp., Metropolitan Bank and Trust Company, Equitable PCI Bank, Export and Industry Bank, Wise Capital Investment and Trust Company Inc., Bank of Commerce, United Overseas Bank, Allied Banking Corp., and the Bank of the Philippine Islands-Asset Management and Trust Group.
The Philippines’ largest steel manufacturing firm reopened last February, five years after it closed due to heavy losses caused by imports of cheaper Russian steel products. The government hailed the revival of NSC, which was made possible with new capital from GIHL and the help of local banks which agreed to convert the steel firm’s huge debts as equity.