CORPORATE SECURITIES INFO

Gov’t takeover of Hanjin

There is unanimity of opinion in the business and labor sectors that all efforts must be taken to prevent Hanjin Heavy Industries and Construction Corp. Philippines from closing down.

On the business side, Hanjin’s proven world-class shipbuilding expertise will be useful to an archipelagic country like the Philippines. The country’s maritime industry could save billions of pesos in construction costs if sea vessels are fabricated locally instead of abroad.

For Hanjin’s 3,000 or so workers, its shutdown would mean their joining the ranks of millions of unemployed Filipinos or those seeking work elsewhere in the world to meet the financial needs of their families.

With Hanjin’s rehabilitation petition already acknowledged by the court and an order issued to creditors not to enforce payment of its debts for the time being, a receiver would soon be appointed to collate the firm’s remaining assets and shipbuilding contracts to see if it can be nursed back to financial health.

It is heartening that Hanjin’s principal bank creditors have agreed to desist from taking individual actions to seize its properties to cover for its debts. They are also involved in efforts to look for a “white knight” that can bail Hanjin out of its financial misery.

Lorenzana’s proposal did not sit well with some quarters. They said the government did not have the expertise or competence to engage in commercial activities and pointed to MRT and LRT operations as proof.

There is some merit in the opposition to the suggestion that the government takes control of Hanjin. The government’s track record in handling business or commercial activities has been spotty.

Until the Governance Commission for Government-Owned and -Controlled Corporations was organized in 2011, government-owned and -controlled corporations were used as milking cows by their managers. Now, they’re closely monitored and they regularly remit cash dividends to the national government.

Recall that in 1992, when the US government pulled out of the then Subic Naval Base—the same place where Hanjin’s shipbuilding facilities are located now—apprehensions were expressed by some sectors about the premises going to seed, or being looted like what happened to the former Clark Air Force Base, when the government takes over its operation.

Mercifully, those fears were debunked when then Olongapo City Mayor Richard Gordon and his corps of volunteers took over and laid the groundwork for its development to a bustling economic zone that it is now.

Given the proper government support and professional management, Subic’s success can be replicated in the Hanjin shipyard.

Since the shipyard is within the premises supervised or regulated by Subic Bay Metropolitan Authority, the latter can take over its operations until the government has firmed up plans to convert it as the shipbuilding arm of the military or make its facilities available to private companies.

Obviously, the government cannot take over Hanjin without first settling its multimillion dollar debts to local and foreign banks. The administration’s economic managers would have to think out of the box to resolve this issue.

With regard to the local banks, one of which is government-owned Land Bank of the Philippines, they can be persuaded to restructure their loans or convert them to equity in the corporation that may be organized to take over Hanjin’s operations.

A similar approach may be adopted by the South Korean banks that hold the bulk of Hanjin’s foreign debts. Since a subsidiary of an erstwhile flagship of the South Korean shipbuilding industry is involved, the South Korean banks may (in the name of nationalist pride) be more accommodating in finding a win-win solution to Hanjin’s problem.

Source: https://business.inquirer.net/263984/govt-takeover-of-hanjin