Best interest of PH to take over Hanjin: defense chief

By Priam Nepomuceno

January 17, 2019, 4:29 pm

MANILA -- With the Philippine Navy (PN) poised to order 26 ships to augment its fleet in the next 10 years, it would be in the country's interest to take control of debt-ridden Hanjin Heavy Industries and Construction Philippines (HHIC-Phil), Defense Secretary Delfin Lorenzana said Thursday.

Speaking at the sidelines of the Foreign Correspondents Association of the Philippines' (FOCAP) Philippine Prospect, held at The Conservatory, The Manila Peninsula, Makati City, Lorenzana said the proposal came following discussions with President Rodrigo Duterte and key Cabinet officials on how to deal with HHIC-Phil’s bankruptcy and the possible entry of new investors to revive the shipbuilding firm.

"We talked about that with the economic managers, (Finance) Secretary (Carlos) Dominguez (III) , (Foreign Affairs) Secretary (Teodoro) Locsin (Jr.) with the President and there were several proposals na lumalabas (that came out) -- offer it to other countries as well, US, Japan, (South) Korea or even Australia, kung gusto nila na i-takeover and sabi ko, bottomline, sabi ko meron pa akong suggestion (if they want to take over the company, and I said I have a suggestion). The Philippine Navy suggested -- why not the Philippines takeover, so that we will have a naval base there and then we will have (the) capability to build our ships," the defense chief said.

"Anyway, (PN flag-officer-in-command) Vice Admiral (Robert) Empedrad (said) we are ordering (26) ships in the next 10 years. These do not include the ships needed by the Coast Guard and the BFAR (Bureau of Fisheries and Aquatic Resources). BFAR, has bought patrol boats from France. So, I think there are enough jobs for this shipyard (in) the Philippines,” he added.

Lorenzana said that based on rough information he obtained from Dominguez, HHIC-Phil owes local banks USD432 million, or PHP22 billion to PHP23 billion.

He revealed that Senator Panfilo Lacson has proposed that the PHP75 billion that was deleted from the budget of the Department of Public Works and Highways (DPWH) be used to settle the debts of the cash-strapped shipbuilder.

“That's more than enough for this, if we are to use it. Maybe he (Lacson) was just joking, but as mentioned by Secretary Dominguez, we must budget that money before we can use it for that," Lorenzana said.

When asked to elaborate on what he meant by takeover, he said the government will assume all liabilities of HHIC-Phil and bid it out to interested parties.

"What Senator (Richard) Gordon wants, his proposal, is to get it wholly. The government will take over the company, shoulder its liabilities with the bank. Then after that, we will put it up for bidding to those interested, so that they can get the majority (stake) and the government will have the minority (stake)," Lorenzana said, adding that this way, the government retains some form of control over HHIC-Phil.

He said a technical working group will be formed to look at this proposal. Hanjin disclosed that it has a total of USD1.3 billion in outstanding loans -- USD400 million from Philippine banks and USD900 million from South Korean lenders.

According to the Subic Bay Metropolitan Authority, HHIC-Phil filed a petition at the Regional Trial Court in Olongapo City on Jan. 8 "to initiate voluntary rehabilitation under Republic Act 10142, otherwise known as An Act Providing for the Rehabilitation or Liquidation of Financially Distressed Enterprises and Individuals."

Hanjin has sought help from the government to find investors that can take over the operation of its shipyard in Subic, as well as to help its employees, who have taken the brunt of the company's financial woes.

Last December, the company laid off more than 7,000 workers. (PNA)