MANILA, December 9, 2003  (STAR) By Des Ferriols - With negotiations still going on for the sale of the National Steel Corp. (NSC), its creditors said the door has not been totally closed to other interested parties depending on the outcome of talks with Global Infrastructure Holdings Ltd. (GIHL).

The Philippine National Bank (PNB) said GIHL has until this month to firm up its offer and convince NSCís creditors that it would provide the maximum benefit to the company while addressing its obligations.

PNB president Lorenzo Tan told reporters that NSCís creditors are keeping their options open, although GIHL had a 90-day exclusivity period within which to firm up the parameters of its offer sheet.

This means NSC has agreed not to open negotiations with other prospective buyers until it is certain that negotiations with GIHL will no longer move on.

"Only if things fall apart with GIHL will other parties be allowed to come in," Tan said. "Just the same, we are optimistic that the provisions we are asking for are doable."

Aside from GIHL, the Dutch LNM Group Holdings N.V. is also interested in NSC as it struggles to compete with China for market share in the regional steel industry. The group is one of two bidders trying to acquire NSCís mothballed Iligan City steel plant.

LNM is trying to expand its operations in South East Asia where its presence is so far limited to its 600,000-ton facility in Indonesia. Acquiring NSC would give it another 1.5 million metric tons of capacity.

NSC was supposed to have been liquidated years ago but it was ordered revived by President Arroyo who made a campaign promise to reopen the plant in Iligan City where she grew up.

Since then, the Arroyo administration has been struggling to convince investors to buy the company and the latest of these efforts involved GIHL, by far the most serious of the offers received by the NSC.

The creditors of NSC, however, are asking for improvements in GIHLís offer sheet, particularly for a shorter repayment period from the original offer of 10 years down to seven to eight years.

Land Bank of the Philippines (Landbank), one of NSCís major creditors, said GIHL is being asked to come up with a better offer that would shorten the repayment period once the company takes over the facilities of the steel plant.

The transaction inched closer to being concluded as it got Danahartaís approval. The state-controlled Malaysian firm took over Hottickís controlling shares in NSC when Hottick went belly-up earlier.

Landbank president Margarito Teves said that in a meeting with the creditors, GIHL was asked to make improvements on its offer, primarily the restructuring of the repayment period for NSCís debts.

Despite its deteriorating condition, NSC still attracted two serious offers from GIHL and LML Metal Group but GIHL was the more serious of the two and its offer sheet has been brought to the creditors for evaluation.

GIHLís offer, according to Teves, is to lease the NSC facility with an option to buy. "But the creditors want GIHL to firm up their price and shorten the repayment period," Teves said.

Originally, the offer was for the company and its new investors to settle its obligations within a 15-year period but this was shortened to 10 years. Teves said creditors want this period to be shortened further to seven to eight years.

Teves said GIHL was given 60 to 90 days to come up with a better package which would be evaluated by the creditors again.

NSCís creditors include the Philippine National Bank, Credit Agricole Indosuez, Land Bank of the Philippines, China Banking Corp., Rizal Commercial Banking Corp., Metropolitan Bank & Trust Co., Equitable PCI Bank, United Coconut Planters Bank, Export & Industry Bank, Wise Capital Investment & Trust Company, Inc., Bank of Commerce, United Overseas Bank, Allied Banking Corp., Bank of the Philippine Islands-Asset Management and Trust Group, and the Development Bank of the Philippines.

Credit Agricole was reportedly opposed to governmentís insistence on reopening the NSC plant but Teves said that an earlier agreement between the company and its creditors requires only the approval of a simple majority of the creditors group in order for the GIHL offer to be accepted.

Reported by: Sol Jose Vanzi

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