Officials are one in saying that the recent awarding of a Subic Bay deal in Zambales to the US equity investment firm Cerberus Management Capital would give the Philippine Navy and Coast Guard a strategic naval base facing the West Philippine Sea.
The take-over of Subic by the US company also makes it easier for the American military to use Subic as base of operations in case fighting in the Russian-Ukraine conflict spills over to Asia. This was earlier promised by President Duterte to Washington.
The Philippine government has finally sealed the deal awarding the 300-hectare shipyard in strategic Subic Bay, Zambales near South China Sea to Cerberus.
“After almost three years of tireless work, the Philippines and US reached a new milestone with the conclusion of the strategically important Subic Bay Shipyard deal,” the Department of Foreign Affairs said in a tweet.
“With this development beneficial to all stakeholders, we look forward to a robust shipbuilding and ship repair facility to serve not only our military and coast guard requirements but also the requirements of the private sector,” Finance Sec. Dominguez said at the reception in Washington where Cerberus signed its agreement for the shipyard’s take-over.
“As the biggest public-private partnership in the 75-year history of Philippines-US ties, it is expected to create thousands of jobs and solidifies US commitment to the region,” the DFA added.
After the US Navy pulled out from Subic Naval Base in 1991, the shipyard inside the Subic Free Zone had been converted into a commercial shipyard.
In 2006, a subsidiary of South Korea’s Hanjin Heavy Industries started building the shipyard facilities in the Redondo Peninsula. The Hanjin shipyard for a while was noted as one of the Top 10 shipbuilders in the world in terms of overbooks. As many as 35,000 workers were employed by Hanjin at its peak in 2016.
However, in 2019 Hanjin ceased operations after defaulting on $1.3 billion in outstanding loans, including $400 million due to Philippine banks, and $900 million in loans from South Korean lenders. It went into court receivership, laid off 10,000 workers and retained only 200 in 2020.
According to reports, New York City-based Cerberus Management Capital, a private equity firm and specialized in distressed investing, was awarded the 50-year lease of the sprawling facility. In turn, Cerberus will pay approximately $300 million to settle the debts of Hanjin.
Four Cabinet members of the Duterte administration — Foreign Affairs Sec. Teodoro Locsin Jr., Defense Sec. Delfin Lorenzana, Finance Sec. Dominguez III and Central Bank Gov. Benjamin Diokno — attended the reception hosted by Philippine Ambassador to the US Jose Manuel Romualdez. US Secretary of the Navy Carlos Del Toro and Steve Feinberg, co-founder and co-CEO of Cerberus Capital Management, were also present.
“The completion of the Subic Bay shipyard will redound to benefits for the country, bring jobs to the local communities, increase economic activity and at the same fortify our strategic security measures. Working with the United States on this project will help ensure that we are able to protect our interests not only for our country but the whole region,” Ambassador Romualdez said in a news statement.
Locsin said with less than two months left to the Duterte administration, “there is no better finale to all the work done to strengthen our ties with the United States than to see the ink on the paper of the biggest public-private partnership in the 75-year history of Philippine-US relations.”
Dominguez said the project was met “with many challenges in the early stages.” But these challenges were overcome with the support of Philippine and US government officials and Cerberus.