Creditor bank sources confirmed yesterday that they had received a fax letter from Danaharta "objecting to and rejecting" the Ispat deal.
The creditor banks have not yet met formally as a group to discuss this new development, sources said.
"The creditor banks at this point, have to crunch the numbers and determine if Danaharta has any legal or technical ground to object to and reject the deal with Ispat," the sources said.
Creditor-bank sources explained that under the memorandum of agreement (MOA) the banks signed with Danaharta, the Malaysian asset firm could only object if there is a sale of more than 80 percent of NSC’s assets.
Danaharta has insisted that it have some voting rights in any future "corporate life-changing" decisions that may be undetaken by the new majority owners of NSC before it agreed to a debt write-down in NSC.
The sale of assets or a change in nature of business of NSC is part of the condition set by Danaharta.
Danaharta, formerly owned 82 percent of NSC, before it agreed to the debt write down and allowed the government and creditor-banks to accept interested bidders for NSC.
Danaharta gained control over NSC through a series of turnovers.
The original investor in NSC was the Malaysian Hottick Group. The Hottick Group, for its part, had some borrowings with some Malaysian banks for which it pledged its NSC shares.
Following a major rehabilitation and restructuring of Malaysian banks at the height of the Asian economic crisis, the Malaysian holding firm Danaharta eventually got control of the NSC shares.
Following the debt write-down, Danaharta lost majority control of NSC, while the banks converted some of their debt into equity in the steel firm, thus tipping majority control in the banks’ favor.
The creditor-banks sources said, would thus hold off on any formal comment on Danaharta’s objection.