US INVESTMENT firm Cerberus Capital Management said it expects a South Korean shipbuilder which leased a portion of its shipyard in Subic to begin operations in 12-18 months.
Cerberus unit Agila Subic shipyard signed a multi-year lease agreement with Hyundai Group unit HD Korea Shipbuilding and Offshore Engineering, which plans to manufacture maritime products at the 350-hectare facility targeted at the offshore wind industry.
The return of shipbuilding to the Subic area will involve tens to hundreds of millions of dollars in investment and generate thousands of jobs, Cerberus Senior Managing Director Alexander Benard said in an online briefing.
“HD Hyundai KSOE will be leasing a large section of the shipyard from us and will be bringing maritime manufacturing back to Subic at a very large scale with an initial focus on offshore wind platforms,” Mr. Benard said.
“This will create very substantial employment and will really bring that economic activity and vitality back to the Subic Bay region … but of course it will take some time to ramp up (operations),” he added.
The agreement with HD Hyundai KSOE, which was formally announced at Malacañang Palace on Tuesday, was signed through Cerberus affiliate Agila South, Inc.
“When we acquired the Hanjin facility two years ago, we set out to revitalize the shipyard, repurpose the site into a multi-use facility, and bring thousands of jobs to the Subic Bay region,” Mr. Benard said, referring to the previous occupant, which went into administration after defaulting on $1.3 billion in debt.
“We’re pleased to take the next step in delivering on that vision by partnering with a premier global shipbuilding and offshore engineering company to make a substantial commitment to the future of Subic Bay and its surrounding communities,” he added.
HD Hyundai KSOE will be building a facility capable of handling offshore wind structures, ship block fabrication, ship repair, and other services. It will operate in the yard’s largest dry dock.
Kim Sungjoon, chief executive officer of HD Hyundai KSOE, said that the “initiative represents a major opportunity to create jobs and reinvigorate the local economy, which will help to further establish the Philippines as a global maritime powerhouse.”
Cerberus now has four major tenants in the Subic Bay facility. The other tenants are global subsea cable company Subcom, logistics company V2X, and the Philippine Navy.
The entire facility can host 20,000 workers, according to Mr. Benard, which was also the same staffing level under Hanjin Heavy Industries and Construction Philippines, Inc.
Cerberus acquired the yard in April 2022 and rebranded it Agila Subic.
“What that means is that for three years, the facility was effectively mothballed; it was not operating, and when you have a facility that is not working for three years, things start to fall into a bit of a state of disrepair,” Mr. Benard said.
“So when we stepped in and took over the asset in April of 2022, we had to begin a process of revitalizing this asset and putting it back into operational condition,” he added.
However, instead of implementing the same business plan as Hanjin, which used the facility as one a shipbuilding factory, Cerberus took a multi-use approach, leasing to various industrial and manufacturing tenants.
Mr. Benard said Cerberus is in talks with other ship repair and maintenance business to fill the remaining space in the yard.
“That is part of the plan, and that is really, I guess, the final piece that we anticipate finalizing later this year as well,” Mr. Benard said.
“We are in active discussions with a few parties, and we believe that before the end of this year we will have signed a lease agreement with a commercial company… to establish a ship repair and maintenance business,” he added.
Meanwhile, Mr. Benard said that Cerberus is also looking at other assets and opportunities in the Philippines.
“The broad categories that are of interest to us are in areas like semiconductor manufacturing and assembly and other types of logistics assets, as we believe logistics and transportation are important areas for the country,” he said.
“Those are really the types of things that we are looking at, and we are hoping to find some specific opportunities in the next year or two,” he added. — Justine Irish D. Tabile
