Sale of National Steel seen before Christmas

The sale agreement between the National Steel Corp. (NSC) and Global Infrastructure Holdings Ltd. (GIHLI) is expected to be signed before Christmas as negotiations closed in on the proposal to shorten the repayment of its obligations from 15 years to only eight years.

According to the Philippine National Bank (PNB), one of NSC’s biggest creditors, the parties wanted to conclude the negotiations before the holidays to pave the way for the reopening of its Iligan facility by the first quarter of 2004.

PNB president Lorenzo Tan told reporters that the main point of contention was the adjustment of the 15-year repayment period that GIHLI had originally proposed.

However, NSC creditors wanted the repayment period to be shortened to at least eight years.

"I think it is doable, that’s why we are optimistic that we can do this before Christmas," Tan said.

Tan said that based on NSC’s reports, it was possible to reopen at least its steel billeting facility within 45 days of the signing. "The most important thing is that we will be able to avoid having to dismantle NSC and selling it for scrap," he said.

The sale of NSC was earlier approved by the Pengurusan Danaharta Nasional Berhad (Danaharta), the asset management arm of the Malaysian government.

Negotiations are still on-going between the NSC, GIHLI and NSC’s creditor banks but the transaction was initially accepted by the Malaysian company that took over NSC’s former major stockholders, Hottick Holdings Inc.

NSC was supposed to have been liquidated years ago but it was ordered revived by President Arroyo who made a campaign promise to reopen the plant in Iligan City where she grew up.

Since then, the Arroyo administration has been struggling to convince investors to buy the company and the latest of these efforts involved GIHLI, by far the most serious of the offers received by the NSC.

The creditors of the NSC, however, are still asking for improvements in GIHLI’s offer sheet, particularly for a shorter repayment period from the original offer of ten years down to at least seven to eight years.

According to the Land Bank of the Philippines (Landbank), one of NSC’s major creditors, GIHLI was being asked to come up with a better offer that would shorten the repayment period once the company takes over the facilities of the steel plant.

The transaction, however, inched closer to being concluded as it got Danaharta’s approval. The state-controlled Malaysian firm took over Hottick’s controlling shares in NSC when Hottick went belly-up earlier.

Landbank president Margarito Teves told reporters that GIHLI has already met with NSC creditors where the company was asked to make improvements on its offer, primarily the restructuring of the repayment period for NSC’s debts.

Despite its deteriorating condition, NSC still attracted two serious offers from GIHLI and LML Metal Group but GIHLI was the more serious of the two and its offer sheet has been brought to the creditors for evaluation.

GIHLI’s offer, according to Teves, was to lease the NSC facility with an option to buy. "But the creditors want GIHLI to firm up their price and shorten the repayment period," Teves said.