NSC can still apply for tax perks

The National Steel Corp (NSC) can register and avail itself of full incentives from the Board of Investments (BOI) once it is acquired by new owners.

Following an inquiry by downstream steel producers who expressed interest in acquiring the beleaguered company, the BOI said NSC has two ways to qualify for full incentives if and when it is reopened by the new owners.

According to the BOI, assets held by the Asset Privatization Trust (APT) and which are eventually taken over by private investors, could be registered as new and qualify for full incentives.

Although NSC has been operating as a private company majority owned by the Hong Kong-based Hottick Holdings Inc, the BOI said it was looking into whether it could still register.

Another way, is if NSC is shut down for over a year. It could then register and qualify for incentives once it reopens.

A BOI official explained that downstream steel producers are keen on acquiring NSC lock, stock and barrel without demanding protection from competing imports through various tariff measures that could compromise the country's position at the World Trade Organization.

Unlike other interested parties, the official said this group only inquired about the possible incentives that NSC could qualify for should they pursue their plan to acquire it.

The most aggressive group so far is that led by the Philippine Steel Rolling Mills Association (PSRMA) which had teamed up with the second biggest steel manufacturer in Russia, Novoliptetsk Iron and Steel Corp (NISC).

Industry sources reported that NISC has begun conducting its due diligence review of NSC to determine its actual prospects and rehabilitation requirements.

The PSRMA is a group of about 18 companies engaged in the production of so-called long steel products which use steel billets in the manufacture of products such as nails, steel bars and the like.

The PSRMA and its Russian partner, however, would have to compete with another local group led by Cathay Pacific Steel Co. (Capasco) which had made indicated interest in acquiring, NSC's assets and reopening the business as a new company.

The Capasco-led group is reportedly waiting for the banks to foreclose NSC and schedule its auction before making a bid instead of buying out its Malaysian owners. This way, NCS could be dissolved easily and a new company could be incorporated to start with a clean slate.

NSC was originally scheduled to go on the auction block last Dec. 22, 1999.