Trade and Industry Secretary Cesar Purisima said the government can step in to resolve the issue but will initially prevail upon the feuding parties to discuss their differences by themselves.
"I will sit down with the NSC creditors to find out how to move forward, but I want them to work out the details of the deal on their own," Purisima said.
One of NSC’s creditors, the Land Bank of the Philippines (Land Bank) earlier pointed out to a provision in the creditor agreement which states that Danaharta can only veto the sale if the sale prices is below 80 percent of the steel firm’s appraised assets.
Land Bank accounts for P1.17 billion of NSC’s debts, P160 million of which are in the form of long-term commercial papers.
The other creditor banks led by Philippine National Bank (PNB) are now determining whether Danaharta, which has a stake of 20 percent in NSC, has the right to object to the sale.
Danaharta originally owned 90 percent of NSC but this was diluted to just 20 percent under the debt-restructuring agreement signed with creditor banks. Its $700-million investment in NSC was also trimmed to $40 million.
Under the pact with creditors, Danaharta ensured it will have a say in NSC’s sale. However, it cannot object to the deal if the steel firm’s assets will be sold for more than 80 percent of its value.
NSC which shut down operations in October1999 due to severe financial problems, resumed operations last December after GIHL bought the steel firm for P13.25 billion, including P1 billion in upfront money. The Indian company will pay the entire amount over a period of eight years.
The signing of the final purchase agreement was also extended to July instead of April this year to give both the creditors and GIHL more time to complete the necessary documents.