By Eileen A. Mencias

Global Steel Philippines Inc., formerly National Steel Corp., has taken its creditors to a Singapore court to prevent them from declaring the company in default, banking sources said yesterday.

The sources said the Singapore court was set to hear the complaint this month after Global Steel filed a case in December.

Banks declared Global Steel in default in October 2005 when it failed to pay banks while renegotiating the terms of a P12.25-billion debt.

Banks with exposure to Global Steel included Bank of Commerce, China Banking Corp., Land Bank of the Philippines, Metropolitan Bank and Trust Co., Philippine National Bank, Rizal Commercial Banking Corp. and United Coconut Planters Bank.

Global Steel?s debt restructuring package includes the resolution of local taxes in Iligan. Creditor-banks have asked local government to waive the taxes.

The sources said the banks were close to reaching an agreement on the local taxes but had to renegotiate them following a change in government after the local elections.

Sources said Global Steel had suspended operations since December last year amid a drop in demand due to the global recession. Representatives of the banks flew to Iligan last month to check on the facility.

National Steel was among the biggest non-performing loan accounts in the country during the 1990s. Its rehabilitation required creditor-banks to take an equity position in the company.

Global Ispat Holdings Ltd., one of the world?s leading steel producers, took over the operations of National Steel and renamed it Global Steel. Global Ispat has facilities in Bulgaria, Nigeria, India, Bosnia, Libya and Zimbabwe.

Global Steel produces over two million tons of steel annually.

The steel company has also faced complaints from the Filipino Galvanizers Institute after receiving tariff protection when it officially declared commercial operations.

The government raised tariffs on certain steel imports, driving up local prices. With higher tariffs, domestic users of steel were forced to purchase their requirements from Global Steel or pay higher duties that made imported steel more expensive.

Global Steel is now the leading manufacturer and principal supplier of flat products in the Philippines and other markets in Southeast Asia. Global Steel products include hot rolled coils, hot rolled plates, cold rolled coils (fullhard, annealed) and tinplates.