Reyes downplays attempt to liquidate Nat’l Steel assets

Trade and Industry Secretary Manuel Roxas II is downplaying an attempt of a creditor bank of the National Steel Corp. (NSC) to liquidate the assets of the mothballed steel firm, a move which could endanger the whole restructuring and rehabilitation plan the government is trying to hammer out.

In an interview, Roxas said that the liquidation proposal comes from only one bank and does not mean that the creditor consortium is breaking up.

"It is just one bank which has an actual mortgage. It will not break up the creditor consortium," Roxas assured.

United Overseas Bank Philippines (UOBP), which holds a mortgage trust indenture (MTI) on NSC’s steel billet facilities, has asked that it be allowed to either sell or lease the said assets.

The NSC’s steel billet shop is valued at P1.1 billion, even though UOBP’s outstanding exposure to NSC is only around P54 million.

UOBP, in its proposal, assured that once it is able to sell the steel billet shop of NSC, it would only deduct its exposure and other related expenses.

The rest of the proceeds, UOBP said, would be given back to the consortium.

However, if UOBP is allowed to sell NSC’s steel billet shop and is able to extinguish its exposure, the rest of the creditors of NSC are likely to push for the further liquidation of NSC’s remaining assets.

But without the assets, government’s attempt to forge a rehabilitation plan for NSC would likely fail, Roxas said.

Roxas, however, remained optimistic that NSC’s restructuring and rehabilitation would push through.

"I am confident that the restructuring and rehabilitation of NSC is viable and realistic," Roxas insisted.

Earlier, another creditor bank, Credit Agricole, had asked the government to take over the its exposure in NSC.

However, Roxas said government could not do so since it would violate the "pari-passu clause" of the creditor consortium.

The "pari-passu clause" requires that any treatment of one creditor must be similarly applied to the remaining creditors.