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NSC may seek refuge from Malaysian govt tohalt its closure
By Kapal Berita

18/10/2000 11:14 pm Wed

Tuesday, October 17, 2000 02:54 AM ZE8

NSC may seek refuge from Malaysian govt to halt its closure

PASIG CITY, (ABS-CBN) -- The possible closure of the cash-strapped National Steel Corporation (NSC) could hit another snag with the Malaysian government as its Malaysian shareholders threaten to seek refuge from the Malaysian authority if the Securities and Exchange Commission (SEC) refuses to lift its order for the liquidation of NSC's assets.

In a letter to the SEC, National Steel Labor Union president Simplicio Villarta Jr. said he was informed by NSC chair and executive director Ibrahim Bidin that Hottick Investments Ltd., the Malaysian owners of the ailing firm, said it will take all necessary actions to prevent the firm from extinction.

"We had the opportunity to talk to Mr. Bidin that Hottick will exhaust all available legal means to stop the liquidation of NSC. And not only that, he also insinuated that our overseas Filipino workers in Malaysia might be sent home as was told to us by then NSC chief operating officer Mr. Tom Galanis, " Villarta said.

To recall, the SEC wavered on issuing the order for the NSC's dissolution as such move could involve political repercussions, possibly straining RP-Malaysian ties. The liquidation of the steel firm was also seen to aggravate political and financial woes besetting the country.

The SEC ordered the liquidation of NSC after the company's Malaysian owners failed to file an alternative plan to rehabilitate the ailing steel maker. Hottick instead requested for additional time to work out for NSC's rehabilitation plan since it was still on talks with prospective partners.

The SEC, however, believes that "petitioner from the time it was directed on Feb 28 to submit a more detailed rehabilitation plan up to the last extension of the suspension of payments order on Sept 30, had all the time to iron out and finalize its own rehabilitation plan."

Furthermore, the labor union stressed the SEC should have consulted first NSC's major stockholders and employees before it ordered the company's foreclosure.

It added that the receivership committee had failed to help prevent the ailing firm from going into dissolution proceedings. "For the past eleven months, however, all that IRC said were nothing but empty promises," Villarta said.

The union also expressed its suspicions over the real motive of Monico Jacob, head of NSC's receivership committee, in handling the case of NSC considering his conflict of interest as a shareholder of another giant company in the country. Jacob is the former chairperson of Petron Corporation.

"A sensible, intelligent and objective assessment of the IRC-drafted rehabilitation plan will show that... it was really designed to be rejected by any thinking majority stockholder what with its highly skewed provisions completely in favor of one party and practically shutting out the other," "Villarta said.

Under the IRC-drafted rehabilitation plan, creditors would convert half of their P16 billion in loans into equity in NSC with the balance to be repaid within 10 years after the steel giant resumes its operations. Creditor-banks of NSC include Land Bank of the Philippines, Allied Banking Corp, Metropolitan Bank and Trust Co., Westmont Banking Corp., Rizal Commercial Banking Corp. and EquitablePCI-Bank.

Meanwhile, Jacob who was also appointed liquidator for NSC, informed SEC chair Lilia R. Bautista he is currently studying the different proposals of six investor groups that have signified interest to take over NSC even after the liquidation order was handed down by the agency.

The investor groups include an Arab-Chinese group, another group represented by Citibank, US-based companies together with a local group, London-based consortium, Duferco, and Ispat.

The steel manufacturer was forced to seek debt relief after it shut down operations in November 1999, following a continued decline in sales due to the influx of cheap imported steel from Russia and South Korea. Its suspension of operations has driven 2,000 employees out of work.