Roxas Holdings Inc., one of the country’s largest sugar producers, seeks to close within this year a buy-in deal with a strategic investor who may acquire up to 20 percent of the sugar firm.
This is expected to help RHI raise funds for its three-year modernization program, which is estimated to cost up to $40 million.
RHI has mandated investment bank First Metro Investment Corp. to sell new shares to a prospective partner.
The company has had discussions with prospective investors in the past but the likelihood of closing a deal is seen much better now. “The timing is better. A lot of investors are looking at the Philippines,” RHI president Renato Valencia told reporters after the company’s recent stockholders’ meeting.
Valencia said the group was planning to upgrade its facilities and automate plant management information systems to bring down unit costs. This is among the measures mapped out to prepare for the tariff reduction on imported sugar to 5 percent in 2015.
Part of the company’s plan is to broaden revenue portfolio by going into pre-mixed sugar production and energy co-generation or selling excess electricity to the grid.
Pre-mixed sugar is a preparation where food additives, flavoring or coloring matters are added to sugar to form a blended raw material that is used in the production of sweetened food or beverage products.
RHI currently has different generators producing the company’s power requirements of 5-15 MW. But Valencia said that with the help of a technical partner, its power-generation capability could be improved. RHI claimed it could boost the efficiency of existing generators, which would allow it to sell 5-20 MW in excess power to the grid.
The Roxas group is also preparing for industry consolidation. Valencia said the group was open to taking over smaller mills that might be having difficulties coping with a liberalized environment.
At the same time, Valencia said the group was looking at possible sugar business joint ventures in the region.
RHI has the capability to produce 80 to 100 tons of sugarcane per hectare, better than the 60-70 tons per hectare average yield globally, Valencia said.
The Roxas group is the leading producer of raw sugar in the country with a market share of about 18 percent and one of the biggest producers of refined sugar, with a 12 percent market share.