Listed sugar and ethanol producer Roxas Holdings Inc. (RHI) is reconsidering the offer of the Lucio Tan group’s liquor arm, Tanduay Distillers Inc., to buy the sugar firm’s P6.5-billion sugar plant in Nasugbu, Batangas.
RHI confirmed this in a disclosure to the local bourse, where it also said it had agreed to proceed with the financial and legal due diligence review.
Covered in the acquisition proposal of Tanduay subsidiary Absolute Distillers Inc. (ADI) are milling and refining assets at the Central Azucarera Don Pedro Inc. (Cadpi).
Tanduay submitted an acquisition proposal to RHI earlier but was turned down due to disagreements over the estate’s valuation.
RHI originally intended to sell Cadpi to Gokongwei-led Universal Robina Corp., but this was blocked by the Philippine Competition Commission (PCC) over monopoly issues.
RHI CFO Celso Dimarucut earlier said Cadpi’s sale would be a source of working capital and part of the proceeds would be used to pare down the company’s debts which were placed at P11 billion.
This development came after the company reported a nine-month loss of P652 million during its fiscal year ending in September. This was blamed on lower output and increasing production costs, a major challenge faced by the entire industry.
“The RHI group, which includes wholly owned subsidiary Cadpi, confirms that it had received the revised indicative proposal of ADI for its Nasugbu assets, and has agreed to proceed with the financial and legal due diligence review,” the company said, referring to Tanduay’s subsidiary.
The acquisition of Cadpi would provide the liquor company another source of molasses—one of the raw materials needed in manufacturing alcohol.
Cadpi produces about 6 percent of the country’s total yearly sugar output, which would complement Tanduay’s growing operations as it continues to expand its footprint, both locally and overseas.
“The terms and conditions of the proposed sales transaction would be firmed up upon completion of the due diligence process,” RHI said.
It also noted that the deal would need the consent of PCC and its creditor banks.