Ahead of the entry of a white knight into its shipbuilding hub in Subic, South Korean shipbuilder Hanjin Heavy Industries & Construction Co Ltd (HHIC) hatched a strategic alliance with Yuchengco group-led construction firm EEI Corp for upcoming construction projects in the Philippines.
This strategic alliance is seen to make use of HHIC’s special intellectual property in underground infrastructure, railway and airport construction projects. HHIC is thus expected to continue doing business in the Philippines even when the Subic shipyard will be sold in the future.
“EEI’s strategic alliance with Hanjin refers to infrastructure construction projects. It has nothing to do with shipbuilding or shipyard [operation],” a source privy to HHIC’s rehabilitation said.
EEI and HHIC have previously worked together on projects such as the Berth 6 Manila International Container project, EEI disclosed to the Philippine Stock Exchange on Friday.
The local construction firm has successfully participated in numerous infrastructure, electromechanical and building projects, with substantial operations in the Philippines and abroad.
HHIC has completed more than 100 construction projects in the Philippines since 1973.
Following the filing of bankruptcy in Korea, five Philippine banks have acquired a combined 20 per cent equity in HHIC to recover part of their $412 million credit exposure to the cash-strapped Korean firm alongside an upcoming sale of the latter’s vast shipyard in Subic.
Yuchengco-led RCBC has a $145-million credit exposure to Hanjin, the largest among local banks. Other local creditor-banks and their estimated exposure are Metropolitan Bank & Trust Co ($72 million), Bank of the Philippine Islands ($52 million), BDO Unibank ($60 million) and Land Bank of the Philippines ($80 million).
Of the $412 million exposure of local banks in Hanjin, $263 million was tied to the 305ha shipyard in Subic. The creditors are now in evaluating offers for this facility and a deal is expected to be firmed up by September.
The other method of recovery is through the conversion of debt to shares in HHIC Korea. While 20 per cent has been acquired by Philippine banks, HHIC’s Korean creditors, including Korea Development Bank, have taken over a 63 per cent stake in the company. The creditors can opt to sell individually using the open market. PHILIPPINE DAILY INQUIRER