THE FIVE local banks exposed to the troubled Hanjin Heavy Industries and Construction Philippines (HHIC-Phil) are exploring a two-pronged approach to recoup their funds, an official from Rizal Commercial Banking Corp. (RCBC) said.
RCBC Head of Strategic Initiatives John Thomas G. Deveras, Jr. told reporters following the lender’s annual stockholders’ meeting that the five banks exposed to HHIC-Phil are eyeing to sell the shipyard in Subic and their shares in Hanjin’s parent firm.
On Jan. 8, the South Korean shipbuilder filed for a corporate rehabilitation before an Olongapo court, leaving some $412 million in outstanding loans from BDO Unibank, Inc. Metropolitan Bank & Trust Co., Land Bank of the Philippines, Bank of the Philippine Islands and RCBC in limbo.
“Essentially, the way we are going to recover that is through two methods. About $263 million of that exposure is tied to the Subic shipyard. So we’re in the process now of evaluating interest to buy the Subic shipyard from the banks,” Mr. Deveras said on Monday.
“[W]e’re waiting for an offer from a consortium to acquire the shipyard from the banks.”
According to the bank executive, foreign shipbuilding firms have expressed interest to take over the facility located at the Subic Bay Freeport Zone.
“Shipbuilding actually requires a lot of technology, supplier ecosystem, and knowledge of the different shipping segments which means you have to be attuned to trade flows across the world. I don’t think local groups have this knowledge,” Mr. Deveras said.
Mr. Deveras denied that tycoon Enrique K. Razon, Jr. was interested in buying the facility, contrary to earlier reports.
“I don’t know where you’re getting the news that Enrique Razon is doing an offer or showing interest. I’ve never met him, so I don’t know what he’s talking about.”
In April, Mr. Razon’s International Container Terminal Services, Inc. (ICTSI) said it is negotiating with banks for the possible acquisition of HHIC-Phil’s assets.
ICTSI is looking to turn the property into a multipurpose facility since Mr. Razon said they are not interested in the shipbuilding business.
Given the interest to acquire the facility from foreign shipbuilding firms, Mr. Deveras said the banks are “agnostic” with the nationality of the potential buyers.
“We’re approaching this as a commercial transaction but because there are geopolitical angles to consider, the government has a final say who they will agree with the banks’ transfer of shipyard,” the official said.
Apart from selling the shipyard, Mr. Deveras said the five local banks are also eyeing to sell their shares in HHIC-Phil’s South Korean parent firm.
“The other method of recovery will be through shares in Hanjin Korea. Of the $412 million exposure, $149 million has been converted into a 20% stake in Hanjin Korea,” he said.
“So when the shares of the Philippine banks are unlocked by December, hopefully the share price goes up and then we’re able to sell at a gain so that we’re able to recover the $149 million.”
The banks downplayed Hanjin’s soured loans, saying they have the financial footing to weather default.
The Bangko Sentral ng Pilipinas earlier said HHIC-Phil’s outstanding debt is “negligible” compared to the total loans of the industry.
On top of Hanjin’s debt to local banks, it was also reported that the shipbuilder also owes around $900 million to South Korean lenders. — Karl Angelo N. Vidal