NSC's Malaysian owners seek review of Allengoal lease pact

PASIG CITY, (ABS-CBN) - The Malaysian owners of the debt-ridden National Steel Corp. (NSC) said Tuesday they are appealing to the firm's biggest creditor-bank, Philippine National Bank (PNB), to reconsider its lease agreement with Allengoal Fabrication & Trading while in search for a long-term investor in the company.

NSC chair and executive director Ibrahim Bidin said allowing Allengoal to lease NSC's facilities for eight months will prevent its further deterioration. The lease will also allow Allengoal to earn in the form of lease payments which would also be used to further maintain the firm's facilities.

Under the proposed lease agreement, Allengoal offered more than P1 billion to lease the steel firm's facilities for eight months.

Earlier, PNB, of which the steel firm has a loan exposure of P5.6 billion, withdrew its support to the agreement as it would not provide a long-term program to ensure the viability of NSC's operations. PNB also heads the steering committee.

The fate of the NSC, however, lies on the alternative rehabilitation plan prepared by Hottick Investments Ltd. which still needs the approval of majority of NSC's creditors and the Securities and Exchange Commission. Hottick owns 82.5% of the steel firm.

On the other hand, Monico Jacob, head of NSC's interim receiver committee, said that despite having recommended the liquidation of the steel firm, the SEC holds the final decision whether to reject or accept the proposed alternative plan that will presented by Hottick Investments.

"It's really up to the SEC. We can only recommend but the SEC still has the last say," Jacob said.

Hottick has reportedly worked out a rehabilitation plan for NSC with two unidentified potential investors to keep the steel firm alive.

The firm earlier objected to the plan submitted by the NSC's acting -receiver, saying it failed to address the consensus of its stockholders and favored NSC's domestic lenders.

The rehab plan drafted by the IRR called for: the restructuring of NSC's P9-billion debt into 10-year amortizing bonds; conversion of the remaining P7.5 billion of debt into equity; entry of a strategic partner, preferably a slab producer; and infusion of additional capital of $600 million to $1 billion into NSC.

Furthermore, the SEC extended for another two weeks or until September 30 the order freezing all actions and claims lodged against NSC to enable Hottick to file an alternative to the IRC-drafted rehabilitation plan and for the IRC to submit the liquidation plan for NSC.

However, SEC chair Lilia R. Bautista said this would be the last time the Commission would extend the suspension order unless NSC could justify its request.

"That will be the last. Either the Malaysians come up with an acceptable plan or NSC undergoes liquidation," she said.

NSC was the country's largest steel manufacturer until it shut down its operations in Iligan City last November due to financial troubles, which started when the pledged capital infusion of Malaysian investors Wing Tiek Group and Hottick failed to materialize.