MANILA, Philippines – Shares of Victorias Milling Corp. will resume trading on the Philippine Stock Exchange on Monday, May 21, ending the lack of liquidity seen since the Asian currency crisis of 1997 when the local sugar giant sought debt relief from creditors.
In a memorandum posted on Friday, PSE president Hans Sicat said VMC had complied with all outstanding obligations with the exchange. The Securities and Exchange Commission had earlier issued an order lifting the trading suspension.
The SEC directed the PSE in 1997 to suspend the trading of VMC’s shares, citing “fraudulent misrepresentation of material information” in the registration statements as well as in the continuing disclosures. In this regard, trading on VMC shares had been suspended since October 10, 1997.
The company has since then undergone a creditor-driven corporate rehabilitation program. Its controlling stockholding is the Lucio Tan group of companies, which provided a crucial lifeline to the sugar firm after it was crippled by the Asian currency turmoil. About 24 percent of its stocks, however, are held and traded by the public.
“In this connection, please be advised that the company has complied with the structured reportorial requirements of the exchange and has paid the corresponding penalties imposed for delayed and non-submission of certain structured reports for the years ended 1999 to 2002,” the PSE memorandum said.
The lifting of the trading suspension is seen benefiting VMC and its shareholders because it will give a market value indication and mechanism for investors to look at VMC as an investment opportunity.
VMC now seeks to renegotiate the terms of its rehabilitation plan with creditor banks, aiming to slash P5.86 billion in remaining debt stock faster than originally envisioned given the sharp decline in interest rates over the years.
The proposed changes to the terms with creditors will strengthen the company’s balance sheet and make it more globally competitive by 2015 when sugar tariffs across the Association of Southeast Asian Nations decline to zero to 5 percent range from 28 percent at present, VMC’s top officials said.
The following amendments to the company’s alternative rehabilitation plan and debt restructuring were proposed.
• Prepayment of P500 million in convertible notes and conversion into equity of the remaining convertible notes (worth about P1.48 billion) as soon as approved; and
• Reduction of interest rate on restructured debt: to 8 percent from 10 percent per annum on the peso-denominated loans; and 5 from 6 percent p.a. on the foreign currency loans.
Because VMC shares will resume trading, the banks will have an exit mechanism if and when they agree to convert more debt into equity.
After the conversion of the P1.48 billion debt into equity, creditor-banks will increase their interest in VMC to 74 percent from 54 percent at present. Among the creditors are CVI GVF (LUX) Master SARL, Philippine National Bank, Land Bank of the Philippines, East West Bank, Australia New Zealand Bank, Metrobank, Development Bank of the Philippines and Narra Capital.