According to PNB, one of NSC’s biggest creditors, the SPV would be jointly 80-percent owned by the steel company’s creditors and its shareholders who will own the remaining 20 percent.
The immediate impact of the agreement would be a four percentage point reduction in its NPL when PNB’s loans to NSC are converted into equity.
PNB’s total exposure in NSC is estimated to amount to P5.6 billion and the amount covered by the agreement totals P4.8 billion.
"The immediate effect of the conversion of the loan into equity for PNB is the reduction of the bank’s non performing loan ratio by approximately four percent," the bank said.
Under the memorandum of agreement signed by NSC creditors and shareholders, the creditor banks agreed to convert P16 billion of their P18 billion exposure into equity equivalent to 80 percent of a new company that will own NSC’s assets.
The remaining 20 percent of the new company would be held by NSC majority owner Hottick Investments Ltd., the Malaysian group that invested $700 to $800 million in NSC several years ago.
Hottick, however, has been taken over by the Malaysian government’s asset privatization agency as the group collapsed roughly two years ago. In effect, Hottick now represents the Malaysian government which is its largest creditor.
NSC was shut down in 1999, in the wake of the price war in the world market for steel and steel products. But even before it closed down, the company has been having serious financial problems.