NSC creditors seal pact with Global Holdings

The creditor-banks of National Steel Corp. (NSC) and India’s Global Infrastructure Holdings Ltd. (GIHL) signed yesterday a memorandum of agreement (MOA) for the rehabilitation of the mothballed steel plant in Iligan.

Securities and Exchange Commission-appointed NSC liquidator Danilo Concepcion was one of the main signatories to the MOA.

The secured creditors who signed the MOA included the Philippine National Bank, represented by its president and chief executive officer Lorenzo V. Tan; China Banking Corp., represented by its president Peter Dee; Metrobank, represented by its senior vice president Cesar Lugtu; Land Bank of the Philippines, represented by its first vice president Cecile Borromeo; and Rizal Commercial Banking Corp., represented by its vice president Angela Tinio.

Meanwhile, GIHL was represented by its principal, Pramod Mittal. Iligan City Mayor Franklin Quijano also signed the MOA while former Trade and Industry Secretary Manuel A. Roxas II witnessed the signing.

The five signatory banks represent 64.32 percent of the total outstanding exposure of NSC to the banking system, valued at P13.8 billion.

NSC’s 13 other secured creditors are expected to follow suit and sign the MOA soon.

According to Concepcion, the MOA "incorporates the commercial terms under which title to the NSC Iligan steel complex will change hands from the NSC secured creditors to GIHL."

GIHL will pay the secured creditors and the original NSC stockholders the amount of P13.25 billion over an eight-year period under a negotiated schedule.

The MOA signing is part and parcel of the overall liquidation plan approved by the SEC.

The secured creditors are expected to formally request the Bangko Sentral ng Pilipinas to approve the registration of the transaction under the Special Purpose Asset Vehicle (SPAV) Law of 2002.

This would alow the secured credctiros and GIHL to enjoy tax incentives and favorable treatment of accounting losses arising from the transaction.

On the other hand, GIHL is expected to form a new company or "newco" that will own the property as well as the plant in Iligan. This newcos will be registered under the SPAV Law.

The signing parties are now expected to negotiate the drafting of an asset purchase agreement whose execution would result in the payment by GIHL of a P1-billion downpayment to NSC’s secured creditors.

The balance of P12.25 billion would be paid over the next eight years.