US-based private equity firm Cerberus Frontier’s acquisition of the former Hanjin shipyard is expected to further stimulate the country’s economic growth as many displaced workers in the facility will be retained and an average of additional 300 jobs annually will be created, Finance Secretary Carlos G. Dominguez III said.
Dominguez called the Cerberus deal on the former Hanjin shipyard a “win-win” for all stakeholders, because, besides the jobs per year from locators and subcontractors, it will provide the Philippine Navy with a naval base “with an ideal harbor for its rapidly expanding fleet facing the West Philippine Sea.”
With the conclusion of the agreement for the buyout of the shipbuilding facilities, Dominguez said the deal will allow five of the Philippines’s largest banks to book a profit from their written-off loans with Hanjin Heavy Industries and Construction Philippines (HHIC-Phil). The Subic Bay Metropolitan Authority (SBMA), where the shipyard is located, will get a better tenant in Cerberus.
“With this development beneficial to all stakeholders, we look forward to a robust shipbuilding and ship repair facility to serve not only our military and coast guard requirements but also the requirements of the private sector,” Dominguez said at the reception hosted by Philippine Ambassador to the US Jose Manuel Romualdez to mark the conclusion of the agreements involving the Cerberus takeover of the shipyard.
“I congratulate Cerberus, the Department of Defense of the Philippines, the Philippine Navy, the banks, and the Subic Bay Metropolitan Authority for striking a deal that will benefit each of the partners and, more importantly, will benefit the Filipino people,” he added.
After the US Navy pulled out from Subic Naval Base in the 1990s, the shipyard inside the Subic Free Zone was converted into a commercial shipyard. In 2006, a subsidiary of South Korea’s Hanjin Heavy Industries started building the shipyard facilities in the Redondo Peninsula. The Hanjin shipyard was for a while listed as one of the Top 10 shipbuilders in the world in terms of overbook; 35,000 workers were employed by Hanjin at its peak in 2016.
However, Hanjin ceased operations in 2019 after defaulting on $1.3 billion in outstanding loans, including $400 million due to Philippine banks, and $900 million in loans from South Korean lenders. It went into court receivership, laid off 10,000 workers, and retained 300 local workers.
According to reports, New York City-based Cerberus Management Capital, a private equity firm specializing in distressed investing, will acquire the debt-laden shipyard for approximately $300 million.
In the same event, Foreign Affairs Secretary Teodoro Locsin, Jr. said “there is no better finale to all the work done to strengthen the ties with the US than to see the ink on the paper of the biggest public-private partnership in the 75-year history of Philippine-US relations,” noting just two months are left for the Duterte administration.
Discussions on the acquisition of the former Hanjin shipyard by Cerberus Frontier began three years ago, according to the Ambassador Romualdez said.
Also at the reception were several key officials of the Philippine government led by Executive Secretary Salvador Medialdea, Defense Secretary Delfin Lorenzana; representatives from the US Departments of State, of Defense and of Transportation, and the US National Security Council; and Cerberus officials led by Steve Feinberg, the co-founder, and co-CEO of the firm.