LNM hikes upfront cash offer for NSC to P2.5B

The informal bidding for the mothballed National Steel Corp. (NSC) continues to heat up as the LNM Group increased yesterday its offer for an upfront cash payment of P2.5 billion to immediately rehabilitate the steel firm and invest P4 billion for repairs, upgrades and working capital in the first year.

Earlier, LNM’s upfront cash offer was P2 billion, besting the other contending group’s P1-billion upfront cash offer.

The LNM Group’s improved offer was relayed by Eric D. Tierie, general manager for marketing of LNM Holdings N.V., following confirmation that the NSC management committee had "accepted" the new offer of Global Infrastructure Holdings Ltd. Inc. (GIHLI).

However, while the NSC mancom had taken GIHLI’s offer, NSC liquidator Danilo Concepcion clarified that this still needs approval by creditor banks’ respective boards.

The final acceptance of GIHLI’s offer by all of the creditor banks however, would only be known early next year.

But the LNM Group is still keen on letting the banks know that it is willing to match and perhaps even top whatever offer GIHLI has on the table.

Furthermore, Tierie said the LNM Group would remit annual additional payments over the next eight years, guaranteed by parent firm LNM Holdings which has a close to investment grade status. Tierie also insisted that the LNM Group’s net present value offer for NSC is better than that of GIHLI. NSC mancom and the creditor banks are locked up in "exclusive" talks with GIHLI.

He reiterated that the LNM Group, is committed to bring up NSC’s production capacity to levels never reached by the steel firm before it closed down in Nov. 1999.

The improved production, Tierie said, would allow it to export its excess production and result in foreign exchange inflow starting 2004.

Tierie assured the LNM Group "understands the urgency, can move very fast and wrap up negotiation and reach agreement within 30 days, arrive at a solution well before it would interfere with the upcoming elections."

If LNM reaches a deal with the banks, Tierie said it could start recruiting former NSC employes by January next year.

The NSC mancom had decided to keep confidential the offer of GIHLI although creditor bank sources said that GIHLI’s total offer for NSC had been increased to P12.25 billion, from its original offer of just P11.905 billion.

While LNM has a global network, GIHLI, which is better known as the Ispat Group India, operates only in India.

The Ispat Group’s flagship, Ispat Industries Ltd., is the sixth largest Indian company in terms of fixed assets worth over $2 billion.