VMC ‘white knight’ mulls assistance for sugar sector

The London-based firm planning to infuse $153 million into cash-strapped Victorias Milling Co. (VMC) also appears to be considering the establishment of a financial institution for the country’s sugar industry.

Romeo Hermoso, VMC chief finance officer, said the Kest Quartermain Venture Capital Partners Ltd. (KQVCPL) which offered to bail out the debt-saddled sugar miller also intends to create a financing system for struggling firms.

"The banking institution to be created by the British company will also help other government programs like the Comprehensive Agrarian Reform Program," Hermoso added.

Earlier, Sugar Regulatory Administration (SRA) Chief Nicholas Alonso told The STAR that KQVCPL "has seen a lot of potential in the country’s sugar industry which now plays an important role in the world sugar market."

Alonso said that the anticipated upswing in world sugar prices has driven multinational firms like KQVCPL into the country where the sugar milling business has fallen short of filling the need of the market.

"There is more consumption than production indicating that there is still room for greater productivity," Alonso added. "In this kind of situation, any businessman will see the potential of making a profit."

After securing the go-signal of the Securities and Exchange Commission (SEC) to carry out its rehabilitation plan, VMC appears to have found a "white knight" in the London-based firm to avert insolvency.

However, the entry of Kest Quartermain into the country may hit a snag as VMC asked the SEC to include first in its rehabilitation plan the two provisions agreed upon by its creditor banks and the sugar milling firm before carrying out the blueprint for its recovery.

In an interview, SEC chairman Lilia Bautista said that VMC sought a temporary restraining order and a writ of preliminary injunction while asking for modifications in the rehabilitation plan which the regulatory body recently approved.

Analysts, however, believe that as soon as these "differences of opinion are ironed out in the VMC management, the rehabilitation plan will definitely be carried out and put the sugar producer back on its feet again."

Last week, Kest Quartermain offered to help VMC in its rehabilitation process with a capital infusion of $153 million which the London-based firm said has been earmarked for the payment of the sugar producer’s principal debt of P6.5 billion and accrued interest of P1.37 billion as of April this year.

Hermoso bared that VMC’s creditor banks would be paid 100 percent of the loan principal and 100 percent of the accrued interest. – Rommel Ynion