Three firms offer to operate NSC

Three companies have offered to operate the manufacturing facilities of National Steel Corp. under lease agreements, further boosting the steel firm’s chances of reopening after over a year of closing shop due to mounting debts and losses.

Aside from the original lease proponent, Allengoal Steel Fabrication & Trading, the battle to lease out NSC’s facilities has attracted Cathay Pacific Steel Corp. and Glencore Far East Philippines AG of Switzerland.

All three have submitted their respective lease proposals to NSC-designated liquidator, former SEC commission Danilo Concepcion, who will evaluate, along with the Department of Trade and Industry, these offers.

The Securities and Exchange Commission approved last year the liquidation of NSC’s P28-billion worth of assets to settle outstanding claims of about P16 billion mainly from a consortium of bank creditors.

The liquidation program followed a series of failed bids and negotiations, primarily on the side of NSC’s majority owners, Hottick Investments Ltd. of Malaysia, in finding a "white knight" that would infuse fresh funding to jumpstart the company’s rehabilitation.

The SEC is presently studying the merits of the lease offers that have been submitted as a possible means to maximize the use of NSC’s assets at its Iligan City plant.

Allengoal, which offered a lease-to-operate-and-maintain arrangement, has even raised its stake from a monthly lease of P17.8 million to P20.5 million, to restore, rehabilitate and maintain the Iligan plant facilities to operational readiness at no immediate cost to NSC.

"The said lease payments shall cover access to conduct productive operation of all facilities within the plant premises," Allengoal president Alexander Delmo said.

Allengoal is proposing a two-year renewable contract for the operation of the hot mill, cold mill, electrolytic tinning line, billet, steelmaking plant and related facilities. Delmo 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.

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.

Glencore, meanwhile, said it was reiterating its interest to operate NSC under a joint venture basis with a local partner – with initial discussions being undertaken with Allengoal itself to determine possible areas of cooperation, Glencore executive vice president Angel Veloso Jr. said.

He said they are continuing discussions with local creditor banks to put together a $200 million loan facility, but are unable to give any details "until such time as all matters have been agreed upon."