Lucio Tan seen as key factor in resolution of NSC issue

Taipan Lucio Tan is a key factor in resolving the current financial problem of the National Steel Corp. (NSC).

Trade and Industry Secretary Manuel Roxas II said yesterday that any resolution to NSC‘s financial troubles would involve not only the Natural Development Co. (NDC) and the Malaysian government, but also the Tan-controlled Philippine National Bank and Allied Bank.

"Any solution must have the support of the banks, primarily the PNB and Allied Bank, as they represent 50 percent of the secured credits of NSC."

Roxas met recently with Ibrahim Bin Bldin, executive director of NSC and chairman of the interim management committee, to further discuss ways to resolve NSC’s financial troubles.

Bldin represents the Malaysian owners of NSC who hold majority, or 82.5 percent of the mothballed steel firm. "During our meeting it was agreed to explore alternative funding possibilities from the Malaysian principals and all other interested parties," Roxas said, adding that "we agreed that it was important for NSC not to dissipate the assets on value of assets as a result of the prolonged inaction."

There was also agreement, Roxas said, that "we must exert effort to arrive at a solution as soon as possible."

Meanwhile, despite the agreement among creditors on segregating the assets of the NSC to pave the way for its liquidation, a local steel company is pushing for a proposal to lease, operate and maintain the plant’s facilities.

In a letter to Securities and Exchange Commission chairperson Lilia Bautista, Alexander Delmo, president of Allengoal Steel Fabrication and Trading, said their proposal "is the best way to develop an effective long-term solution to the problem of NSC and finally settle its obligations with its creditors."

"We would like to reiterate out long standing proposal to immediately implement the restoration and preservation phase of the said facilities and, on the side, arrest the growing disenchantment among the retrenched former NSC employees over the issue of NSC," Delmo said.

Based on Allengoal’s lease-to-operate-and-maintain proposal submitted to NSC‘s liquidator last January, Allengoal will restore, rehabilitate and maintain the Iligan Plant facilities to operational readiness at no immediate cost to NSC.

Delmo pointed out that Allengoal has always been ready with its financial, technical and organizational resources to mobilize within days and upon approval of the lease contract.

NSC, once the country‘s biggest source of semi-processed steel products, has shut down its operations since November 1999.

Delmo stressed their main strength is their ability to immediately implement the proposal since its managers and personnel have had extensive exposures and experiences in the very same facilities that NSC has, along with the technical assistance of Hatch Associates, one of the world’s best in iron and steel engineering and operational consultancy services.

The Allengoal official added that should an agreement from a long-term buyer to buy out NSC be forged, the company would be agreeable to a mutual pre-termination of the lease contract, subject to the full refund of the cost of rehabilitation, restoration and maintenance.

Allen is proposing a two-year renewable contract wherein it would be paying a monthly lease of P17.8 million for the operation of the hot mill, cold mill, electrolytic tinning line, billet, steelmaking plant and related facilities.

In addition, Allengoal may implement a profit sharing scheme with NSC at a minimum of 40 percent of net profit (after deducting operating expenses, cost of money and taxes) immediately after the recovery of the restoration/rehabilitation costs shall have been completed or on the 13th month of the lease agreement, whichever comes first. – With Jeng Diaz