THE GOVERNMENT may help save the troubled Hanjin Heavy Industries and Construction Philippines (HHIC-Phil) through a bailout via a white knight to be assisted by the state, Budget Secretary Benjamin E. Diokno said on Wednesday.
Mr. Diokno floated the idea of injecting fresh funds to “somebody from the private sector” which will take over the operation of the South Korean shipbuilder. The additional capital, he said, will be coursed through government lenders Land Bank of the Philippines (LANDBANK) as well as Development Bank of the Philippines (DBP).
“We’ll probably use somebody… [One] option is somebody from the private sector… Maybe tying up with countries like France or Israel — they can join forces, and then we will help them through the government banks,” Mr. Diokno told reporters yesterday, although noting there are no concrete details regarding the government’s involvement in the takeover as of yet.
“Manghihiram sila (they will borrow money), we will provide the money. So may return naman iyon sa government,” he added.
Last week, Defense Secretary Delfin N. Lorenzana said he posed the idea of a government takeover of Hanjin’s facilities to President Rodrigo R. Duterte, adding that the latter was “very receptive” to the idea.
“While we sympathize with the financial woes of Hanjin, we are excited really by this development because we see the possibility of having our own shipbuilding capacity in the Philippines, especially large ships like what’s being built in Hanjin’s shipyard in Subic,” Mr. Lorenzana said during the Defense department’s 2019 budget deliberations in the Senate.
“And so, the Flag Officer-in-Command Admiral (Robert A.) Empedrad reached out to me — I think yesterday or the other day — and I said, ‘why not we takeover the Hanjin [facility] and give it to the Navy to manage?’” he recalled.
However, Mr. Diokno said the military will not take over the HHIC-Phil’s facility as the government can instead inject funds into DBP and LANDBANK to help the embattled firm.
“Wala pang (there is still no) concrete plan, but we will not allow it to just [close] without any contingency plan. Meaning, there will be a white knight who will take over with our assistance.”
Should there be a military takeover, Mr. Diokno said the Navy might only assume a “small part” of the shipyard.
“If that was taken over, then we can use that to build our naval forces because we buy a lot of ships,” he added in a mix of English and Filipino.
The South Korean shipbuilder’s unit based in Subic Bay filed for corporate rehabilitation last Jan. 8, leaving some $412 million in outstanding loans from Philippine banks in limbo.
Rizal Commercial Banking Corp. had the biggest exposure with $145 million lent to HHIC-Phil, followed by LANDBANK with $85 million; Metropolitan Bank & Trust Co. with $70 million; BDO Unibank, Inc. with $60 million; and Bank of the Philippine Islands (BPI) with $52 million.
Meanwhile, Finance Secretary Carlos G. Dominguez downplayed the effects of the firm’s default to the domestic economy.
“You know that this Hanjin is of course a concern for some banks, but overall, it’s a relatively small amount for the entire economy… I’m sure the banks can work it out. We’re ready to help them,” he told reporters yesterday.
Mr. Dominguez, who is also the ex-officio chairman of LANDBANK, added that they are already discussing the issue with the Cabinet, given that the state-run bank’s exposure to the embattled shipbuilder “is not small.”
“We’re already starting now. We have to understand what’s going on. First of all, I’m the chairman of LANDBANK. $85 million is not small.” — K.A.N. Vidal