The Grey Chronicles


PhP13.25 Billion is a Bargain!

Comparative Acquisition Cost of NSC

Comparative Acquisition Cost of NSC

Wing Tiek acquired the privatized NSC in October 1994 for PhP 11.2 Billion, for which they paid PhP7.9 Billion. The averaged exchange rate for October 1994 was PhP25.394/US$. Meaning, Wing Tiek took over NSC for about US$441 Million (Badelles, 1999).

When Hottick Investments Ltd. borrowed $800 million from Labuan banks (Business World, 18 March 1999) plus $32 million from Philippine banks (Manila Bulletin, 10 March 1999) to take over Wing Tiek’s 82.5% of NSC, the exchange rate at the time the money was borrowed (Dec 1996) then averaged PhP26.292 per U.S. dollar.

This means that Hottick purchased NSC for about PhP21.88 Billion (US$832 Million). Consequently, using the same exchange rate, NSC was worth about PhP28.77 Billion (US$ 1095 Million). In July 13, 1999, Edgardo J. Angara, former PNB president, claimed that NSC’s assets was estimated at PhP24.00 Billion (US912.81 Million). Furthermore, doing the simplest of arithmetic, NSC was in debt by PhP4.77 Billion (US$181.57 Million)

By 2000, “NSC ceased paying its loans totalling PhP16.2 billion ($401.2 million) citing financial difficulties. ” (Business World, 07 January 2000)

On 26 January 2000, Securities and Exchange Commission (SEC) approved NSC’s petition for the suspension of debt payments. The petition was to counter recent moves by its creditor banks led by the Philippine National Bank (PNB) to foreclose the assets of the Iligan-based steel plant said to be worth P29.272 billion (at PhP40.4266 per US$, about US$724.08 Million) (Felix, 2000).

Starting 2000, several bids offered to buy, lease or invest to NSC, such as:

Russia’s Novolipetsk Iron and Steel Corp. (NISC) teamed up with local downstream producers of steel products and conducted a due diligence review of NSC to determine its actual prospects and rehabilitation requirements (The Philippine Star, 21 January 2000).

The Swiss-company Duferco, Inc., represented by Credit Agricole, wanted to acquire in 2000 controlling interest in NSC (The Philippine Star, 17 February 2000).

On 24 October 2000, Swiss’ Glencore proposed to infuse $150 million into NSC with an additional $200 million in fresh working capital (Ynion, 2000).

Allengoal offered to lease-operate NSC in April 2000 then again in January 2001 and signed lease agreement with NSC on 14 September that year for a fixed monthly rental plus a share of net profits (The Philippine Star, 18 September 2001). Backed by unionized NSC employees, the Allengoal plan: operate the plant within 45 days saving P12 million a month in maintenance costs; a P20.5 million monthly lease for two years until NSC finds a new buyer; share 40% of the net income; and a P100-million cash-and-performance bond deposited to ensure safety and facilities preservation. In addition, it had a technical tie-up with Hatch Associates, NSC’s consultant since its inception, and an initial P400-million credit line from International Exchange Bank. (Bondoc, 2001).

By May 2000, the debt-saddled National Steel Corp. (NSC) proposed a combination of government intervention, debt-to-equity conversion, debt restructuring and the immediate capital infusion of $600 million to $1 billion by a strategic investor to get the firm operating profitably again. (Felix, 2000). Note: the foreign exchange rate in May 2000 was PhP41.806 to US$, thus the least capital infusion amounted to PhP25.084 Billion!

Although there were no published values for most of the abovementioned bids, as NSC’s debt increased through the years due to unpaid interest payments, thus NSC’s value regressed through the years. The bank consortium took the bait with GIHL offering PhP13.25 Billion (US$225 million) for NSC! (The Philippine Daily Inquirer, 08 December 2007)

So how much is NSC really worth?


Badelles, Alipio Cirilo V. (1999). House Resolution No. 1224. Manila: House of Representatives, Eleventh Congress, Second Regular Session. 11 November 1999. back to text

Rueters. (1999). “Malaysia takes over Hottick investment gone sour in RP.” Manila: Business World, 18 March 1999. back to text

MB, 10 Mar 1999. “National Steel loses P4 B.”. Manila: Manila Bulletin 10 March 1999. back to text

Calica, Dymphna R. (2000). “Finance dep’t thumbs down PNB write off of National Steel’s debt.” Manila: Business World, 07 January 2000. back to text

Felix, Rocel C. (2000). “SEC grants 30-day debt relief to NSC”. Manila: The Philippine Star 26 January 2000. back to text

Felix, Rocel C. (2000). “NSC submits revised plan”. Manila: The Philippine Star 22 May 2000. back to text

Ynion, Rommel (2000). “NSC creditors eye Glencore to save firm”. Manila: The Philippine Star 05 December 2000. back to text

Ubac, Michael Lim (2007). “Philippines not afraid of globalization, says Arroyo” Manila: The Philippine Daily Inquirer, 08 December 2007. back to text

Ferriols, Des (2000), “Russian steel giant eyes National Steel”. Manila: The Philippine Star, 21 January 2000. back to text

TPS, 17 Feb 2000. “Gov’t favors Swiss firm to take over Nat’l Steel.” Manila: The Philippine Star, 17 February 2000. back to text

TPS, 18 Sep 2001. “National Steel employees back Allengoal proposal.” Manila: The Philippine Star, 18 September 2001. back to text

Bondoc, Jarius (2001). “GOTCHA: Restart National Steel, restart north Mindanao.” Manila: The Philippine Star, 17 November 2001. back to text



  1. Yo everyone! :D
    Im new to
    Hope I can be a regular here!

    Comment by jenneczc — 2009.March.18 @ 06:05 | Reply

  2. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

    Comment by Allen Taylor — 2008.December.13 @ 09:45 | Reply

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