New Hanjin shipyard owner wants risks insured
The new owner of the Hanjin shipyard at the Subic Bay freeport zone will start operations only when assured that industrial risks arising from the investment are insured, according to the Government Service Insurance System (GSIS).
In a March 29 bid bulletin, the GSIS said US-based investment manager Cerberus Capital Management, which bought the insolvent shipyard in 2019, was not an insured entity under the reinsurance policy that the state-run pension fund was currently procuring.
To recall, GSIS was seeking a reinsurer for the facility’s industrial risks, projected to hit a gross amount of $904.57 million. The GSIS first sought but failed to hire a reinsurer for the shipyard in January.
The reinsurance contract, worth $2.09 million, would cover industrial risks, which GSIS defined as physical loss, destruction of or damage to the property, including but not limited to perils caused by fire and lightning; full earthquake; typhoon; flood; extended cover; riot, strike and malicious damage; sprinkler leakage; broad water damage; bursting and/or overflowing of water tanks, apparatus and pipes; landslide and subsidence; spontaneous combustion; and electrical fire, as long as “directly and wholly attributable to any sudden and unforeseen cause.”
Strategic location
The GSIS is mandated to insure government assets, properties as well as interests under Republic Act No. 656 or the Property Insurance Law. The Subic Bay Metropolitan Authority, a government entity, owns the land where the shipyard stands under a 50-year lease agreement.
The shipyard, previously run by Hanjin Philippines, is considered an important asset because of its strategic location near the disputed West Philippine Sea.
In a previous report, Reuters said the US firm came in with a $300-million deal after Hanjin sought out white knights when it defaulted on loans worth $1.3 billion. The deal is supposed to close in April.
“The shipyard can be seen as non-operational at the time of the [risk] survey. However, as signified by Cerberus officials from the beginning of their negotiation with the GSIS, their operation will not take long to commence as soon as they are assured that the insurance coverage is already in place,” GSIS senior vice president and insurance bids and awards committee chair Eduardo Fernandez told prospective bidders.
Bidding documents were made available by the GSIS beginning March 17. The deadline to submit to the GSIS and opening of bids will be on April 5.
