CADP Group reorganized

Publicly listed Central Azucarera Don Pedro (CADP) and Central Azucarera de La Carlota (CAC) announced yesterday the approval in principle by their respective boards of directors of the reorganization of the CADP Group and the consolidation of its sugar business under CAC.

"The reorganization program will enable the CADP Group to grow its core sugar business, enhance shareholder value and pave the way for attracting new capital to enable it to pursue expansion plans," CADP chairman Pedro Roxas said.

Under the reorganization plan, CADP, which is the parent company of CAC, will be transformed into a holding company to diversify its business portfolio. The company shall spin-off its sugar manufacturing operations into a new corporation that will own and operate its refining and milling facilities in Nasugbu, Batangas.

Roxas explained that CADP – the country’s leading sugar refiner accounting for 25 percent of total industry production – plans to integrate the new corporation with its 73 percent owned subsidiary CAC which operates a 10,000-ton per-day mill in Negros Occidental.

"CAC is a critical element in our drive to be a strong leader in Philippine sugar," he noted. "The consolidated sugar corporation will become our platform for future expansion and acquisition."

At the end of the reorganization, CAC will be the group’s sugar consolidated flagship and will be much larger and financially strong than its present structure.

Roxas added that the consolidated sugar business will have a broader ownership base and increased market liquidity.

"This will allow us to raise fresh capital to further reinforce our balance sheet and enable us to resume our capital modernization projects," he said.

In a related development, the group disclosed the possible entry of a prospective foreign strategic investor. The investor manifested its intent to acquire a minority interest in its sugar business.

CADP acquired 43 percent equity stake in 1998 to establish a presence in Negros, the country’s largest cane and sugar producer, and to complement its sugar refinery in Batangas. In 1999, it increased its investment to 73 percent.