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MANILA, Philippines – The acquisition of United States-based private equity firm Cerberus Frontier of the former Hanjin shipyard at the Subic Bay Freeport is a “win-win” especially for the military and the private sector, said Finance Secretary Carlos Dominguez III.
In a statement sent over the weekend, Dominguez said the deal with Cerberus Capital Management gives the Philippine Navy a naval base “with an ideal harbor for its rapidly expanding fleet facing the West Philippine Sea.”
The amount of the deal was not disclosed, but media outlets like Reuters reported that the buyout was worth $300 million.
The Navy first expressed interest in the Hanjin shipyard back in January 2019. It asked government agencies involved in the sale of the shipyard to “include the Navy as part of the equation.”
It was also during that time that some Chinese firms expressed interest in acquiring the troubled South Korean shipyard, amid tensions between China and the Philippines over the West Philippine Sea.
Having a deep-sea harbor is a core requirement of the Navy, according to former Navy chief Rear Admiral Giovanni Carlo Bacordo. None of the Navy’s current bases have a harbor deep enough to house its largest strategic vessels, which are 2 landing dock ships, 3 offshore patrol vessels, and a corvette. These warships currently dock at commercial ports.
The Hanjin shipyard is “very close” to the Naval Education and Training Command and the Philippine Merchant Marine Academy, making it accessible to Navy personnel.
Foreign Secretary Teodoro Locsin Jr. described the deal as the biggest public-private partnership between the Philippines and the US.
“There are like two months left for the Duterte administration. There is no better finale to all the work done to strengthen the ties with the US than to see the ink on the paper of the biggest public-private partnership in the 75-year history of Philippine-US relations,” Locsin said.
Meanwhile, Philippine Ambassador to the US Jose Manuel Romualdez said the deal will forge a “stronger alliance founded on deeper friendship and mutual respect” between the two nations.
“I cannot thank everyone enough for your valuable contributions, knowing that it had not been easy putting this project together and making it happen. With the conclusion of the agreements, I am hopeful that this project will bear the fruits of our efforts for generations to come,” Romualdez said.
Former Philippine ambassador to the US Raul Rabe also said the public-private partnership between the two countries is a significant investment that would generate jobs in the Philippines.
“Will this enhance our security ties with the US? Yes, of course, and it can be said that it operationalizes aspects of our defense treaty it covers when it works to enhance the military capability of the two allies,” Rabe told Rappler.
US Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner likewise praised the completion of the deal as an “important” example of public-private partnership between Washington and Manila.
The discussions on the acquisition of the former Hanjin shipyard by Cerberus Frontier began three years ago, according to Romualdez.
In 2019, Hanjin filed for voluntary rehabilitation due to $1.3 billion in outstanding loans – $400 million from local lenders Land Bank of the Philippines, Rizal Commercial Banking Corporation, Metrobank, Bank of the Philippine Islands, and BDO Unibank.
With Cerberus acting as the white knight, the banks exposed to Hanjin’s default would book a profit, while the Subic Bay Metropolitan Authority, where the shipyard is located, “will get a better tenant” in Cerberus, according to Dominguez. – with a report from Sofia Tomacruz/Rappler.com