Cerberus and Hyundai Subic partnership 

BABE’S EYE VIEW FROM WASHINGTON D.C. - Ambassador B. Romualdez - The Philippine Star

We are extremely pleased with the announcement by Cerberus Capital Management that they have finalized a lease agreement for HD Hyundai – the global leader in shipbuilding and offshore engineering – to lease a portion of the Agila Subic facility in Subic Bay.

It can be recalled that the Subic shipyard was abandoned by Hanjin Heavy Industries that declared bankruptcy in 2019 after incurring over $412 million in debts, leaving thousands of Filipinos jobless.

We were fortunate to play a role in saving the facility during a meeting at the White House with then-deputy national security adviser Matt Pottinger to discuss the shuttered facility in Subic Bay. The administration of president Donald Trump was interested in saving the shipyard and put it to good use, such as a docking and repair facility for US ships and still make it commercially viable.

Obviously, what was important for us was to make the Subic site economically viable and get our local banks paid, plus making sure that it does not fall into the wrong hands. The process was very challenging and complex because Hanjin had a lot of lenders, both domestic and international. It took almost three years for us and then-finance secretary Sonny Dominguez to put the Hanjin project together, with leading private equity firm Cerberus emerging as the “white knight” and whose unwavering commitment resulted in the completion of the agreement in April 2022.

As Cerberus senior managing director Alex Benard noted, it was not easy to get an abandoned, 350-hectare facility back on its feet and make it operational again. I remember when we visited the site in June 2022 with members of the US-Philippines Society and Cabinet officials, several of the buildings were already rundown and dilapidated.

But in just two years since the American financial firm took over the facility through its portfolio company Agila Subic, they have managed to attract several tenants that include global subsea fiberoptic cable company Subcom, logistics company V2X and the Philippine Navy that was the facility’s very first tenant, occupying some 100 hectares in the northern portion.

No doubt Cerberus is getting closer to realizing its vision of revitalizing the Subic shipyard and transforming it into a multi-use facility to make it more economically sustainable instead of using it as just one huge shipbuilding site. As explained by Alex, a key component to their business plan is a diversified business model where different parts of the shipyard would be used for different purposes.

The major objective, however, is to bring shipbuilding back to Subic, and Cerberus has taken a very major step towards that direction through the partnership with HD Hyundai that, along with its affiliates, is acknowledged as a global leader in shipbuilding and offshore engineering. As a matter of fact, US Secretary of the Navy Carlos del Toro admits that he was “floored” and impressed by the shipbuilding capabilities of Hyundai during his visit to the Korean shipbuilder’s headquarters in Ulsan earlier this year.

Hyundai is leasing the bigger of the two drydocks in Subic and is expected to bring large-scale maritime manufacturing back to the facility, initially focusing on offshore wind platforms. Site preparations will be commencing soon, with operations projected to start within the next 18 months.

According to the Korean shipbuilder, they plan to build a state-of-the-art maritime complex capable of handling offshore wind structures, ship block fabrication, ship repairs and other services. Aside from creating jobs and boosting the local economy, we’re optimistic that Hyundai’s presence will also equip Filipino workers – who are talented and very hardworking – with world-class skills, knowledge and expertise.

President Ferdinand Marcos Jr. was very pleased by this latest development, saying this is an opportunity that would “bring maritime manufacturing back to Subic and restore the glory days of shipbuilding back to our shores.”

The President also took note of Cerberus’ “impeccable track record,” describing it as a “powerful force that would spur growth and development across many sectors.”

He also expressed optimism that the investments that will be created from thereon will be “especially beneficial to Subic because these will strengthen the freeport area’s vital role as a hotspot for industrial, commercial and other economic activities” – becoming a growth driver for the rest of the Philippines.

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We commend the Atin Ito (This is Ours) Coalition for demonstrating what true Filipino nationalism is all about when its advance team of 10 people successfully breached the blockade put up by China at Panatag Shoal in the West Philippine Sea, and delivered essential supplies to Filipino fishers in the area. They showed the true spirit and courage of the Filipino – standing by what is rightfully ours.

“Talagang atin ‘to” is all I can say to those few misguided individuals who continue to defend China’s harassment and bullying in the West Philippine Sea, saying we are being used by the United States to fight their war. Really?

To those people challenging the leadership of President Marcos, saying he is “masyadong mabait” (too softhearted) or weak – they are gravely mistaken. They are underestimating him for his politeness reflective of his upbringing and British education.

PBBM, born under the Virgo sign, is a perfectionist and I know him well enough to categorically say that when he puts his mind into something – he will get it done. He did not become president by accident. And when he says he will protect our sovereignty and will not give up even a square inch of our maritime territory, you can be darn sure he will – and without a doubt do what is right for our country.  

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Email: [email protected]

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