The group of businessman Manuel V. Pangilinan is set to infuse P523.75 million in additional funds into Roxas Holdings Inc. (RHI) to help finance the expansion program of the integrated sugar and ethanol producer.
This will be done via RHI’s issuance of convertible note to First Pacific Natural Resources Holdings B.V. The note is convertible to 125 million common shares of RHI at P4.19 per share. The shares will be issued out of an increase in the firm’s capital stock.
“The issuance of the convertible note and the SRO (stock rights offering) in 2016 demonstrate the shareholders’ strong support for RHI. It will contribute to a significant improvement in the company’s overall financial position,” RHI chief finance officer Celso Dimarucut said.
RHI had raised P1.02 billion from the SRO in May last year priced at P4.19 per share.
“We remain focused on achieving a significant increase in Ebitda (earnings before interest, taxes, depreciation and amortization) to P1.7 billion this crop year which will largely finance the forecast P1.5 billion of capital expenditure to be undertaken this year to enhance the efficiency of RHI’s sugar and ethanol plants.”
The increase in RHI’s capital stock had been approved by the company’s directors and will be presented for approval by stockholders in the annual meeting scheduled for Feb. 15.
In October to December 2016—the first quarter of RHI’s new crop year ending September 2017—RHI incurred a net loss attributable to equity holders of parent firm of P110.6 million. This was, however, an improvement from the P120.96-million loss in the same period a year ago.
RHI attributed the reduction in its first-quarter loss to improved operating efficiencies and lower costs.
RHI said it had timed the start of its current milling operations later than in previous years to optimize the advantages of milling more mature canes. Central Azucarera de la Carlota Inc. (CACI) started its operations in October while Central Azucarera Don Pedro Inc. (CADPI) began milling in December 2016.
Despite the late start of the milling season and the unexpected rainy weather which hampered sugar cane harvesting operations, RHI said it managed to slightly improve sugar production to 1.554 million Lkg bags (50-kilogram bags) from 1.545 million Lkg bags for the same period last year. The increase was driven by operating efficiencies and improved relationship with planters, RHI said.
Consolidated revenue decreased to P1.5 billion from P2.7 billion in the same period last year due to a reduction in raw sugar sales by almost P800 million.
Sales contracts for refined sugar hit P1.67 billion during the quarter, up by 27 percent year-on-year.
RHI chair Pedro Roxas said: “The group’s revenues are expected to accelerate in the coming quarters as CADPI started its refining operations in January and deliveries to customers of refined sugar under these sales contracts start. We are also beginning to see positive effects across the group from the upgrading efforts we undertook at our sugar and ethanol plants last year.”
RHI president Hubert Tubio added: “The cost of goods sold for the period improved, resulting in a higher gross profit rate, from 4 percent in the first quarter of 2016 to 7 percent in the current crop year. The earlier organizational realignment, taken together with the upgrading of our equipment and processes, has reduced expense levels during the first quarter. We expect this trend to continue throughout the balance of the current crop year.”