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Private sector takeover of Hanjin Heavy assets will take some time

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By Madelaine B. Miraflor

A private sector takeover on the assets of bankrupt Hanjin Heavy Industries and Construction Philippines (HHIC-Phil), a subsidiary of the Korean shipbuilder, will still take time, while questions remain unanswered on the proposed government takeover.

Overview of the shipbuilder Hanjin Heavy Industries and Construction-Philippines (HHIC-Phil) shipyard in Subic Freeport. (MB file photo)

Overview of the shipbuilder Hanjin Heavy Industries and Construction-Philippines (HHIC-Phil) shipyard in Subic Freeport. (MB file photo)

Trade Secretary Ramon M. Lopez said the takeover on Hanjin assets will still take time and a lot of study, and that the government will make sure it looks into all the offers first before proceeding to another option, which is a government takeover.

More than three months since HHIC-Phil filed for bankruptcy, no private firms have made a definitive offer yet on a possible takeover of the firm’s assets.

“The government agencies involve are still talking. There is nothing firm yet. There is an ongoing interest from United States, Japan, and South Korean, too. China mentioned they are looking into venturing into the same business here but not necessarily into Hanjin assets,” Lopez told reporters.

In total, Lopez said there are about two companies in each of the country he has mentioned that are now looking into the Hanjin assets.

“They can do their study, which could be simultaneous. But still, you wouldn’t know if and when they will submit a definitive offer that the Philippine government can consider,” Lopez said.

According to him, the government did not set a timetable as to when these companies should make the offer or when the government takeover should take place, but they also wants to have this fixed as soon as possible.

“We want to revive employment as well as soften the assets’ debt exposure to banks, but it really has to be a private sector initiative,” Lopez said.
The company particularly has US$1.3 billion in outstanding loans, US$400 million of which came from several local banks while US$900 million came from South Korean lenders.

RCBC Group is the biggest creditor of Hanjin here, with $140-million debt exposure. Land Bank of the Philippines has about $80-million exposure in Hanjin, while Metropolitan Bank and Trust Co. and BDO Unibank has $72 million and $60 million, respectively. Bank of the Philippine Islands has $52-million exposure.

Defense Secretary Delfin Lorenzana earlier said that the Philippines is ready to takeover the Hanjin property, located in the former US naval base in Subic Bay, in case no private deal would be signed.

But, Lopez said that even with a government takeover, a private company should still be tapped to operate the shipbuilding company.

“If ever, there will be [government-funded] projects there, which will cater to shipbuilding requirements of Philippine Navy. But shipping lines are supposed to be private. You [the government] can’t run the facility. We basically just going to be a customer if you talk about the DND [Department of National Defense],” Lopez said.

“[Under such takeover scheme] DND will just be the user of the facility but not the operator. They can just be customers. It will still be a private operation,” he added.

Asked if he is talking about some sort of a Public-Private Partnership (PPP) venture, Lopez said he “doubts it.”

It was in January when the news on HHICC-Phil’s bankruptcy blew up. At that time, the company already ceased all of its shipbuilding operations due to lack of funding and its inability to pay its debt.

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