RP sends team to sort out dispute between National Steel creditors, Danaharta

A Philippine delegation that reportedly has the blessings of the Arroyo government will go to Malaysia to find out why Pengurusan Danaharta Nasional Berhad is "objecting to and rejecting" the deal creditor banks of National Steel Corp. (NSC) is trying to close with the Ispat Group of India.

Government sources confirmed that it has been asked once again to intercede in behalf of the NSC creditor banks to seal a deal that would allow the sale and rehabilitation of the Iligan-based steel firm.

Although the banks had already signed a memorandum of agreement with the Ispat Group of India for the takeover of NSC by the Indian group, the former Malaysian owners of NSC are apparently not too happy about the deal.

Government sources said that Danaharta has not explained it’s objection to the Ispat deal.

Since Danaharta is still capable of blocking the sale of NSC to Ispat, the banks, along with the government, want to find out and possibly appease or convince Danaharta about the positive merits of such a sale.

The creditor banks are hoping to iron out any kinks before they finalized the sale to Ispat by next month.

Creditor-bank sources explained that under the MOA the banks signed with Danaharta, the Malaysian asset firm could only object if there is a sale of more than 80 percent of NSC’s assets.

Danaharta had insisted that it have some voting rights in any future "corporate life-changing" decisions that may be undertaken by the new majority owners of NSC before it agreed to a debt write-down in NSC.

The sale of assets or a change in nature of business of NSC is part of the condition set by Danaharta.

Danaharta ,formerly owned 82 percent of NSC, before it agreed to the debt write down and allowed the government and creditor-banks to accept interested bidders for NSC.

The original investor in NSC was the Malaysian Hottick Group. The Hottick Group, for its part, had some borrowings with some Malaysian banks for which it pledged its NSC shares.

Following a major rehabilitation and restructuring of Malaysian banks at the height of the Asian economic crisis, the Malaysian holding firm Danaharta eventually got control of the NSC shares.