Steel Asia Manufacturing Corp. may have to settle as much as P8 billion in claims from creditors of National Steel Corp. (NSC) to be able to acquire the mothballed steel facilities and invest another P7.35 billion to get the assets running.
Roberto Cola, Steel Asia vice president, said the company will negotiate with the banks and the local government of Iligan for a reduced amount and long payment terms.
Cola said discussions have started between Benjamin Yao, Steel Asia chairman and president and NSC liquidator Danilo Concepcion on the planned acquisition of the assets.
According to Cola, NSC owes about P3 billion from creditor banks led by the Philippine National Bank. Iligan City’s claims is about P4.3 billion in real property taxes between the last quarter of 1999 and March 31, 2015.
NSC also owes P400 million in electricity from the National Power Corp.
“All parties must agree , that is the first step… the amount and terms would depend if Steel Asia can support it,” said Cola, adding that his company is seeking the consent of parties to take over the assets and pay claims over an eight-year horizon similar to what it had done when it acquired Bacnotan Steel (now Calaca Works).
“We will negotiate for a reduced (amount) particularly with the local government which has claims of over P4 billion in real property taxes that includes the interest and fines,” Cola said.
Cola said just to get a medium section mill running in the facilities would require $150 million in investment. This mill would produce H beams, channels and sheet piles for construction application in high-rise buildings and bridges that the Philippines currently imports to support growing demand from infrastructure as well as private construction.
Future plans would require additional investments for the establishment of a mill for large fabricated steel plates used in very large sections.
Cola noted the importance of the offer of Steel Asia as each day the NSC facilities are closed is a “missed opportunity for the country.”
Cola said Steel Asia if and when it acquires NSC would have to build an entirely new plant as most of the equipment have been “cannibalized. ”
He said only 80 hectares are currently occupied at the 200-hectare complex .
He said it would take a year to get all permits. As an industrial area, NSC’s infrastructure is complete:
land, port, water and power.
“We will have to value the assets and consider the claims and look if it is viable. All these things are critical; we will have to pay all the assets but the value of the claims and assets should be balanced,” Cola said.
He noted that the price of industrial land has appreciated to about P4,000 per square meter.
This means the value of the land alone is P8 billion.
SteelAsia is the largest reinforced steel bar maker in Southeast Asia and the Philippines.
SteelAsia has ofered convert NSC it into a state-of-the-art steel manufacturing complex as a first step to
a long overdue local steel industry.
SteelAsia plans to put up a modern and environment-friendly factory in Iligan, producing products like plates, beams, billets, slabs, sheet piles, among others, which are all currently imported, he said.
Under the proposal SteelAsia will negotiate with all valid claimants, including the government, for an asset-purchase arrangement.
If the proposal materializes, Iligan will be SteelAsia’s 7th steelworks. Its six steelworks, located in key growth regions throughout the country, are all operating at full capacity.
In 2016, SteelAsia produced 2.7million metric tons in 2016 for rebars and billets. The company is putting up new facilities the next two years to double its capacity to 5 million metric tons, which will be 60 percent of total annual demand.