GMA witnesses MOA signing for NSC rehab

President Arroyo witnessed yesterday the ceremonial signing of the memorandum of agreement (MOA) that finally paves the way for the long-stalled rehabilitation and restructuring of the bankrupt National Steel Corp. (NSC).

President Arroyo, along with Finance Secretary Jose Isidro Camacho and Trade and Industry Secretary Manuel Roxas II, witnessed the signing of the MOA on the NSC rehabilitation program among the major creditors of the former state-run steel mill which closed shop in November, 1999 due to financial problems.

The principal signatories yesterday were Lorenzo Tan, president of the Philippine National Bank (PNB) and Rayokichi Kawaguichi, president and chief executive officer of Marubeni Corp.

The PNB and Marubeni are among the major creditors of the NSC together with 14 other Philippine banks and foreign banks which have a whopping P18 billion in total combined loans to the NSC.

Briefing Palace reporters after the ceremonial signing of the MOA, Camacho said the event was a "major milestone" not only for the NSC but also for the government’s fiscal picture since the government was the company’s single biggest owner.

"This would also go a long way to strengthen the banking system of the country because the P18 billion of combined loan exposures to the NSC of these banks comprise a very big percentage of our total non-performing loan or NPLs," Camacho said.

Camacho said the loan exposure of these banks to NSC represent about three percent of the NPLs in the country’s banking system.

Roxas, for his part, said the MOA for the NSC would, hopefully, lead to the re-opening of the company’s steel mills in Iligan by the middle or towards the end of January next year and provide employment to some of the 4,000 workers laid off with its closure in 1999.

"We are looking, for the re-opening, it will really be subject to all of bids and the offers. So I think the most immediate target date is by the middle or end of January," Roxas said.

"This MOA would have been converted into shareholders’ agreement which would actually operationalize many of the elements contained therein. In the meanwhile, the private sector, particularly the banks can already begin to solicit such offers," he explained.

Tan said the signing of the MOA was "a big step" for the PNB and the rest of the major creditors of the NSC after several years of acrimonious negotiations on how to implement the rehabilitation and restructuring of the moribund company to enable it to pay back its debts.

"The next step would be to set up the special purpose vehicle and then after that we can start probably preparing the terms of reference on who we would entertain prospective investors in the company," Tan said.

Roxas recalled it was upon the initiative of President Arroyo that the operations of NSC were being revived as a result of her state visit to Malaysia in May last year.