S&P maintains Philippine ratings; no upgrade amid revenue concerns

Global Steelworks International Inc.,  the country’s largest steel manufacturer, has denied rumors that they are selling their Iligan plant to another Indian firm, the Tata Group.

“That is not true. We are not for sale,” Sangram Mohanty Global Steel’s head of corporate communications said.

However, industry sources said that the two Indian firms are discussing Tata’s bid to acquire Global Steel. “They are in serious negotiations,” the source said.

Danny Concepcion, legal counsel of Global Steel’s creditor banks said the steel firm can sell its assets provided it gets the approval of the financial institutions. Philippine National Bank heads the consortium of creditors.

A ranking official of one of the creditor banks said they have heard that Global Steel is indeed for sale. “We heard about it but they have not discussed it formally with us,” the banker who requested anonymity said in a telephone interview.

The embattled company has been in the news recently after the Vietnamese government has accused it of using forged and fake documents in order to avail of the zero percent tariff. The discovery has led to the revocation of duty free privileges and the imposition of a seven percent duty on CRC from the Philippines.

The Vietnam government has revoked the Philippines’ right to sell steel products without additional fees after it has discovered that Global Steel has been using “forged and fake documents.”

Steel manufacturers from ASEAN countries have zero duty privileges when selling to fellow ASEAN nations. The imposition of duty will add to the cost of the product sourced from the Philippines.

However, Vietnam has imposed up to seven percent import tax on cold rolled coils (CRC) from the Philippines after the Vietnam Steel Association (VSA) discovered that Global Steel, the biggest manufacturer of CRC in the country — has allegedly been using forged and fake documents to make it appear that the products are made from the Philippines.

Global Steel has denied all the allegations.  

When asked if the CRC’s sold in Vietnam is subject to seven percent import duty, Mohanty confirmed the report, but said the matter is “under dispute.”

Global Steel refused to answer accusation of VSA that it is impossible for it to fulfill the Common Effective Preferential Tariff (CEPT) provision because the company only started production of hot rolled products in April 2006 on a trial basis.

CEPT is the duty free import provision. It is a privilege given to ASEAN producers that can provide that their CRC shipments are 40 percent or more rolled from substrate manufactured in ASEAN member nations.