Last week, the bidding for some P14-billion worth of NHMFCs bad loans was declared a failure as the prospective investors shied away, expressing reservations on the structure of the asset management company (AMC) that would take over the portfolio.
But Finance Secretary Juanita Amatong told reporters over the weekend that under the law, the government could not go into negotiated sale until the public auction has failed at least twice, although she said the new E-Procurement Law has eased this requirement to only one failed bid.
According to Amatong, NHMFC has the prerogative to go into negotiations with prospective bidders. "But I dont think they will do it that way," she said. "Theyll probably go through a second bidding."
The DOF sits as a member of the NHMFC Bidding and Awards Committee (BAC) which announced earlier that a second bidding was tentatively scheduled at the end of March.
The auction for the housing loan portfolio of the NHMFC would have been the first of its kind under the Special Purpose Vehicle Act (SPVA) and would have taken off a significant portion of the banking industrys non-performing loans (NPL).
Officials revealed after the closed-door proceedings that the bidders had opposed the governments insistence at retaining control over the decision-making process of the new entity that would take over the bad loans once it is awarded after the bidding.
However, NHMFC president Angelico Salud reasoned out at a press conference that none of the bidders satisfied all of the conditions set by the BAC.
The NHMFC had earlier pre-qualified four groups: Goldman Sachs, Lone Star, Lehman Brothers and Deutsche Bank. However, only two bidders actually submitted bids for the portfolio.
According to Salud, the BAC was forced to disqualify the bids because the documents were not signed by the bidders due to their respective reservations on several major points in the privatization scheme.
The main point of contention was the proposed ownership structure of the AMC as NHMFC demanded continued protection by exercising significant control over the decision-making process.
Salud admitted that there were also reservations over the "perceived gap" between the NHMFCs "reserve price" and the valuation of the bidders.
"We dont know whether there was a gap because we didnt open the actual bids since none of them were qualified bidders," Salud explained. He also declined to reveal what the NHMFCs reserve price was.