Subic Bay Freeport—The Subic Bay Metropolitan Authority (SBMA) is not divulging details of the impending takeover of the Hanjin shipyard here by American investment management company Cerberus Capital.
This despite the reported announcement by newly-installed SBMA Chairman and Administrator Rolen Paulino Sr. on Monday about the takeover of the bankrupt South Korean-owned shipyard.
A well-placed source in the SBMA Business and Investment Group told BusinessMirror on Tuesday that the Subic agency won’t disclose arrangements between the national government and Cerberus and its supposed takeover vehicle Agila NY Naval Inc./Agila South Inc. pending the signing of a contract and the finalization of an incentives scheme for the operation of the Hanjin shipyard.
“No, let’s wait until Cerberus gives its consent that we can already release information. They are so sensitive about these matters,” the source said when asked about details of the contract. “We have been told by Agila to treat everything as confidential.”
News about the shipyard takeover broke Tuesday in some national newspapers, as well as an international financial paper.
The national broadsheets reported that Paulino announced the shipyard takeover by Cerberus during the SBMA turnover rites last Monday, when he formally took over the Subic agency from resigned Subic chief Wilma T. Eisma.
The international financial paper Nikkei, however, merely said that Cerberus “is poised to take over the bankrupt Hanjin shipyard” and that it is “finalizing documentation and plan to close the deal by April 15” with shipyard owner Hanjin Heavy Industries and Construction.
SBMA employees present in the SBMA turnover rites said Paulino only mentioned Hanjin in the context that Agila will be replacing it as shipyard operator—a deal he attributed to the Eisma administration.
However, a source privy to the negotiations to find a “white knight” for the bankrupt Korean shipyard told BusinessMirror on Monday that the lease contract with Agila would most likely be signed within the week, as well as an agreement with the Philippine Navy for the operation of the part of the shipyard at Subic’s Redondo Peninsula.
Meanwhile, final signing for the takeover will be made in the United States later this month, the source added.
The negotiation for the Hanjin shipyard in Subic involves the takeover of assets worth $2 billion and some P400 million in loans from Philippine banks that Hanjin defaulted on in 2018.
The former shipyard operator, Hanjin Heavy Industries & Construction Philippines, went to court in January 2018 to initiate voluntary rehabilitation under Republic Act 10142, which provides for the rehabilitation or liquidation of financially distressed enterprises, sending massive financial shockwaves in the country and abroad.
As BusinessMirror reported at the time, Hanjin’s mother firm in South Korea reported that its Subic affiliate filed for insolvency following “a drop in new orders amid the protracted slump in the global shipbuilding sector.”
The South Korean firm started operations here in 2006 and initially invested $1.7 billion to complete its 300-hectare shipyard in record time. In 2016, the company’s foreign direct investment stood at $2.3 billion, the biggest in Subic since the free port was established in 1992.
Hanjin also became the single biggest employer in the Subic Bay Freeport since 2015, with its 30,000-strong workforce at its Redondo facility making up almost 40 percent of the total Subic workforce.
Image credits: Henry Empeño