Gov’t backs NSC deal with Indian firm

The government is fully behind the deal struck by the creditor banks of the National Steel Corp. (NSC) with the Ispat Group of India.

This was disclosed yesterday by Trade and Industry Secretary Cesar Purisima who said, "we’d like to support this deal because it is in an area that is not as economically advanced as the rest of the country."

Investments such as this is a unique opportunity and provides employment to the area," Purisima stressed.

Aside from that, Purisima said, the Philippines still has a residual interest in NSC through the National Development Corp. (NDC) which has remaining 2.5 percent stake in the steel firm.

"We still want to create value out of the deal," Purisima said.

Purisima has decided to write the Malaysian holding firm, Pengurusan Danaharta Nasional Berhad, to find out exactly what Danaharta is objecting to.

Purisima explained that Danaharta has not specified its objections to the deal with Ispat.

"We want to know what part they were objecting to. In their letter they did not spell out the issues," Purisima said.

Apart from his letter, Purisima has also asked NSC liquidator Danilo Concepcion to accompany representatives from the creditor banks to meet with Danaharta officials to discuss the issues regarding the sale of NSC to the Ispat Group.

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 had insisted that it have some voting rights in any future "corporate life-changing" decisions that may be undertaken 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 was 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.