NSC liquidator defends bidding process

Responding to allegations of irregularity in the bidding process, Securities and Exchange Commission (SEC) appointed liquidator of National Steel Corp. (NSC), lawyer Danilo L. Concepcion, clarified yesterday that at the very outset the creditors of NSC have determined that the offer of Global Infrastructure Holdings Ltd. (GIHL) was far superior to that of LNM Holdings N.V. (LNM).

The banks believe that the guaranteed cash payment by GIHL amounting to P13.5 billion over 10-year period was better than the P2.3-billion payment proposed by LNM. Under LNM’s proposal, this cash payment is payable only after all the legal issues concerning the NSC Iligan plant have been resolved in favor of NSC. On a present value basis, the banks believe that GIHL’s offer is more than double LNM’s offer despite a lower downpayment by GIHL of P1 billion.

While both offers include a profit-sharing component, the GIHL proposal provides a definitive profit participation formula for the NSC creditors and shareholders.

The LNM bid on the other hand, mentions only about a profit-sharing mechanism. LNM would discuss the details of the profit-sharing mechanism only when LNM emerges as the successful bidder.

Concepcion argued that if the profit-sharing scheme is indeed the significant component of the LNM proposal, its features should have been explained clearly in the bid documents they submitted. In fact, the profit-sharing scheme was mentioned only in the lease offer of LNM and not in the outright purchase proposal.

The SEC-appointed liquidator noted further that the creditor banks could have awarded the contract to GIHL outright. The decision to give GIHL a 90-day exclusivity period was aimed at improving the terms of the sale in favor of the NSC stakeholders.

GIHL has earlier broken its own silence following LNM’s continued appeal to the banks to give it a chance to present its improved offer for NSC.

The creditor-banks were given an informal deadline up to Jan. 15 to approve the offer of GIHL. The banks have not yet announced their decision.