Tuesday, February 12, 2008 Sugar firm secures P4.69-B loan for projects
THE strategic expansion program of listed sugar conglomerate Roxas Holdings Inc. (RHI) is now underway with the recent completion of its P4.69- billion loan.
Banco de Oro-Equitable PCI Inc. provided the loan to bankroll RHI’s capacity expansion projects and building of an ethanol-fuel plant.
The company plans to expand it’s sugar milling and refining subsidiaries, to increase its revenue-generating capability and enhance its cost-competitiveness to place RHI in a competitive advantage against low-priced imported sugar that will enter the country beginning 2010.
Sugar tariffs will be lowered to five percent from 38 percent under the Association of Southeast Asian Nations Free Trade Agreement which the country signed in 1992.
Of the amount, P4.7 billion will be allocated for the purchase of two sugar mills abroad and other capacity expansion projects.
The P1.2 billion will be for the setting up of the ethanol plant and the rest, to refinance existing debts.
RHI is set to borrow another P2 billion from two other banks to complete the P6 billion capital it needs to finance the expansion projects.
RHI earlier engaged Macquarie Securities (Philippines) Inc. as its financial adviser to assist the company in its strategic initiatives and capital raising activities.
“We are optimistic that the strengthening and expansion of our sugar business will position us to overcome the threats and take advantage of the opportunities the domestic sugar industry will face,” RHI chairman and chief executive officer Pedro Roxas said.
“We are implementing new systems that will ensure our survival during this period and enable us to remain as a strong industry leader,” he added.
RHI is acquiring two sugar mills from the US and Australia, which will increase the company’s capacity by 52 percent.
Takeoff
“The new mills will also bring down our operational costs, particularly on fuel, and will serve as a takeoff point for our entry into the energy sector,” Roxas added.
The company is diversifying its business activities by entering into the energy sector through manufacturing potable and fuel ethanol to take advantage of the definite market brought about by the enactment of the Biofuels Act of 2006. The law mandates the use of locally sourced biofuels.
Avenue
“The Biofuels Act gives RHI an avenue for growth outside of sugar. The absence of fuel ethanol producers in the Philippines to date, as well as the guaranteed market for ethanol, gives us a competitive advantage,” Roxas said.
RHI president and chief operating officer Francisco del Rosario Jr. disclosed the company is also planning to expand and build its market share by strengthening its traditional market. (PR)
