news/updates
Sugar firm gets loan to compete against imports
By Honey Madrilejos-Reyes
BusinessMirror
February 12, 2008
A PUBLICLY-LISTED sugar conglomerate has completed a multibillion peso-bank loan which will be used to improve its operations so that it can better compete against low-priced imported sugar entering the Philippines beginning 2010.
In a statement, sugar conglomerate Roxas Holdings Inc. (RHI) also said it will use its P4.69 billion borrowing from Banco De Oro-Equitable PCIBank to fund the expansion of the sugar milling and refining subsidiaries, increase its revenue-generating capability, and enhance cost-competitiveness.
These are among the strategies to be implemented by RHI to boost its competitive advantage.
The company, a wholly-owned unit of publicly-traded CADP (Central Azucarera Don Pedro) Group, will also be acquiring two sugar mills from the United States and Australia, which will increase its capacity by 52 percent.
After the P4.69-billion loan, the company will also secure another P2 billion from two other lenders to complete the P6-billion capital it needs to finance its expansion program. The borrowing will bankroll the construction of an ethanol plant.
The company engaged Macquarie Securities (Philippines) Inc. as its financial advisor on the 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,” said Pedro Roxas, RHI chairman and chief executive. “We are implementing new systems that will ensure our survival during this period and enable us to remain as a strong industry leader.”
The company is likewise diversifying its business activities by entering the energy sector through manufacturing potable and fuel ethanol. This is to take advantage of the definite market brought about by the enactment of the Biofuels Act of 2006, which mandates the use of locally sourced biofuels.
“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.
