Hanjin to assign shipyard contract to ‘white knight’

Published June 8, 2021, 3:58 PM

by Bernie Cahiles-Magkilat

Renegotiation of the contract of South Korean-owned Hanjin Heavy Industries and Construction-Phils. Inc. (HHIC-PH) for the sprawling shipyard facility in Subic is nearing completion and which will be assigned to their “white knight,” according to Subic Bay Metropolitan Authority.

SBMA Administrator and CEO Wilma Eisma said that “Hanjin will assign the contract to whoever is their white knight, renegotiate and then for court’s approval of its rehabilitation.”

SBMA Administrator and CEO Wilma Eisma. (Photo credit: http://www.mysubicbay.com.ph/about-us/departments/administrators-office)

Eisma also said that the operation of the facility will depend as to what Hanjin will assign to the white knight.

At the virtual Business and Investment Climate webinar by the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI), SBMA manager Karen Magno said they are nearing completion on the renegotiation of the Hanjin contract with the SBMA.

“We are nearing completion on the renegotiation for their contract with SBMA. I’m only referring to the contract with SBMA, because the court matter is another matter and we are out from that,” said Magno without divulging the details of the contract.

“Paperworks have already been laid out and done this but that was just a chunk of it, because again, the court case is still present, the court system have to decide on that,” she reiterated. Magno also said they have the support of the Department of Finance.

It is apparent that Austal, the Australian shipbuilder, and US private equity funder Cebernus is the favored group to assume control of the Subic Bay shipyard, where it plans to build and service US warships. Subic Bay was the based of the US Navy until its departure in 1992.

Magno also said they were even talking to the Philippine Navy, which will be a tenant fo the American company.

Earlier in May this year, Australian Ambassador Steven J. Robinson said that negotiations, which have been ongoing for the last couple of year involving Austal, Hanjin Heavy Industries and Construction-Phils. Inc. (HHIC-PH) and a number of other entities, have entered into a “critical” stage.

“I am hopeful that there will be some progress made in the next month or two that will see a finalization of these negotiations,” said the ambassador, but added that details of the negotiations are still commercially confidential.

“Let’s just hope there is a positive outcome that will see Austal expands further here in the Philippines,” the ambassador added.

The ambassador also noted that if the Hanjin facility negotiation will come into fruition, it will be a significant expansion of its existing shipbuilding facility in Balamban, Cebu where Austal already invested significant funds.

In the same briefing, Dave Shiner, Austal director for Asia based in Manila, also confirmed that discussions are ongoing as he expressed hopes “fingers crossed” of further news in the coming weeks.

Shiner also said that Austal is committed to the Philippines and would like to invest further to become a shipbuilder of choice not just in the country but for the region.

Earlier, the Australian shipyard company and the US-based Cerberus were said to be taking over the Hanjin facility.

The Hanjin Subic shipyard is one of the major shipyards that catapulted the Philippines to become the fifth largest shipbuilding country in the world.

The Korean-owned HHIC-PH filed for bankruptcy protection in January 2019 after failing to repay $1.3 billion loans in what is regarded as the country’s largest-ever corporate default. Of this amount, $900 million is owed to South Korean banks and the rest to five Philippine banks.

Since several potential bidders came up including interest from North American, German, Turkish, and other Asian companies. Chinese bidders have also expressed interest, according to the Department of Trade and Industry.

At its peak, the Subic Shipyard employed over 30,000 people with tens of thousands more in the local economy depending indirectly on its operation.