Unpaid realty taxes a tougher hurdle for NSC than Danaharta — PNB exec

The issue of the condonation of the unpaid real estate taxes of National Steel Corp. (NSC) by the Iligan City Local Government is more likely to delay the closure of the sale of NSC to the Ispat Group rather than the objection to the sale raised by the Malaysian Pengurusan Danaharta Nasional Berhad, according to Philippine National Bank (PNB) president Lorenzo Tan.

PNB is one of the largest creditors of NSC.

In an interview, Tan expressed the view that the objection raised by Danaharta is actually "manageable" since Danaharta now only owns 20 percent of NSC, while the banks have majority control amounting to almost 80 percent.

Instead, Tan disclosed, what could delay the July 20 closure of the sale of NSC to Global Infrastructure Holdings Limited (GIHL), the local subsidiary of the Indian Ispat Group, is the full condonation by the Iligan City Local Government of NSC’s unpaid real estate taxes amounting to P755 million as of February this year.

Tan said that the new Iligan City Mayor, Lawrence Cruz, has not yet indicated whether he will honor the agreement previously reached with former Mayor Franklin Quijano.

Even Quijano, however, had stipulated that while he would have been willing to condone a big portion of the taxes, the amount that could be condoned would be limited by statutory limitations.

However, as far as the banks and GIHL are concerned, Tan said, they would want a full condonation of the real estate taxes.

If a portion of the real estate taxes has to be paid, Tan explained, the banks and GIHL would again have to discuss who would pay the amount, and such negotiation could delay the closure of the sale.

While the banks and GIHL have signed a Memorandum of Agreement (MOA) on the sale, GIHL has not yet paid the banks the P1 billion cash upfront until the deal is closed as scheduled on July 20 this year.

The request for tariff protection for NSC, Tan clarified, is not a condition for the closure of the sale.

A team comprised of NSC liquidator Danilo Concepcion and representatives from the creditor banks is set to go to Malaysia to talk with representatives of Danaharta to find out Danaharta’s objection to the sale.

Government, which still owns a residual interest in NSC and is eager to create value out of its remaining NSC holdings, has written Danaharta to find out exactly what the Malaysian asset holding firm is objecting to.