US-based private equity firm Cerberus is set to buy the Philippines’ insolvent Hanjin Subic Bay shipyard in a $300m deal, reported Reuters.

The shipyard is located at a former US navy base near to the South China Sea.

Its strategic location is said to make it appealing to Chinese state-run companies, which caused national security concerns for defence chiefs in the Philippines.

Around eight foreign firms, including two anonymous Chinese entities, previously showed interest in purchasing the shipyard in 2019.

The Subic Bay shipyard provides access to the disputed South China Sea, where China has been increasing its military actions to control trade routes.

Prior to defaulting on $1.3bn of loans in 2019, the shipyard was operated by Hanjin Philippines. It owes $412m in debts to various Filipino banks.

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Some parts of the shipyard will be leased to locators, reported Reuters, citing facility administrator Rosario Bernaldo.

The Philippines’ Navy is also planning to lease a third of the 300ha shipyard from Cerberus for its own base, according to a source familiar with the matter.

According to another source, the deal is anticipated to be completed by 15 April, and the shipbuilding facility is scheduled to restart operations later in the year.