Closure of NSC sale to Global Ispat remains on hold

The closure of the sale of National Steel Corp. (NSC) to Global Infrastructure Holdings Ltd. (GIHL) continues to be held up even as an Asset Purchase Agreement was finally signed last Friday, Sept. 10.

Two other agreements – the Omnibus Agreement and the Sharing Agreement have not been signed because of two other conditions that the creditor banks have to complete.

According to John Deveras, senior vice president of the Philippine National Bank, the creditor banks have to secure a Certificate of Eligibility (COE) from the Bangko Sentral ng Pilipinas (BSP) on their compliance with the SPAV Law since the NSC deal is eligible under the SPAV Law.

By registering the deal under the SPAV Law, banks can amortize over a 10-year period any losses they may incur from the deal.

Likewise, an agreement also has to be reached between the secured creditors of NSC and the National Power Corp. on how the outstanding liabilities to Napocor have to be paid.

Only after those two conditions have been met, Deveras said, will the Omnibus and Sharing Agreement be signed.

The Omnibus Agreement covers the arrangement for the payments by GIHL to the creditor banks of the P13.25 billion selling price.

The Sharing Agreement outlines how payment among creditor banks will be distributed as well as other obligations to the City of Iligan, Napocor and the liquidator.

Deveras said that proceeds of the sale would first be paid out to the City of Iligan to settle the P171.2 million in real estate taxes and P270 million to the Napocor.

Once those obligations are settled, then all the creditor banks would get their share, Deveras said.

Once the two other documents are signed, GIHL will have to pay the required downpayment of P1 billion or $17.857 million.

So far, Deveras said, GIHL has deposited in escrow $6.5 million as part of the downpayment.

GIHL also has another P250 million standby Letter of Credit which is part of the security arrangement in the event that GIHL does not deliver payment.

"The banks will not reimburse GIHL for the expenses it has incurred to rehabilitate the NSC facilities in Iligan so far," Deveras said.

The creditor-banks of NSC and GIHL had signed a Memorandum of Agreement (MOA) last Jan. 29 which laid out the commercial terms of the agreement.