"They agreed to a 90-day extension on the closing date as they have yet to secure certain documents necessary for the conclusion of a deal," Securities and Exchange Commission (SEC) chairperson Lilia R. Bautista said.
Bautista said the extension would allow the SEC to act on the petition filed by a certain Teofilo Cacho seeking to stop NSC from including his real estate properties in the assets to be disposed to GIHL.
Cacho claims that he owns two parcels of land totaling approximately 8.5 hectares now occupied by NSC.
Bautista said while the SEC is not opposed to the planned lease of the Iligan plant to GIHL, the terms of the agreement have yet to be scrutinized by the agency.
Under the memorandum of agreement between the creditors and GIHL, the winning bidder will pay the banks a total of P13.25 billion, of which P1 billion will be in cash and the remaining P12.25 billion paid in eight years.
The agreement calls for the lease of the NSC plant with an option to purchase it in three years’ time.
Although GIHL had already won the right to the NSC assets, creditors are asking for more concessions, specifically the grant of a shorter period for the repayment of loans. The agreement provided for a 10 to 12-year repayment period, but creditors want it reduced to as short as seven years.
At present, NSC’s creditors are spending between P5-P10 million a month just to maintain the steel plant.
Among NSC’s creditors are Landbank of the Philippines, Philippine National Bank, Credit Agricole Indosuez, China Banking Corp., Rizal Commercial Banking Corp., Metropolitan Bank and Trust Co., Equitable PCI Bank, Export and Industry Bank, Wise Capital Investment and Trust Co. Inc., Bank of Commerce, United Overseas Bank, Allied Banking Corp., and the Bank of the Philippine Islands-Asset Management and Trust Group.
The Philippines’ largest steel manufacturing firm reopened last February, five years after it closed due to heavy losses caused by imports of cheaper Russian steel products. The government hailed the revival of the NSC, which was made possible with new capital from GIHL and the help of local banks which agreed to convert the steel firm’s huge debts into equity.
The reopening of the plant is expected to contribute about P4 billion to the Philippines’ gross domestic product, P1 billion in taxes to the National Government, and P157 million in taxes to the Iligan City government.
With annual production capacity of 1.5 million metric tons of steel, NSC is expected to generate $750 million in revenues per year, based on the current average steel price of $500 a ton, GIHL said. – Zinnia dela Peña