Nenaco moves to trim deficit

The Metro Pacific-controlled shipping line Negros Navigation Co. Inc. will undertake a four-pronged program to wipe out about 73 percent of its existing deficit and enhance its attractiveness to potential buyers, the company said in a statement to the Philippine Stock Exchange.

Nenaco corporate information officer Virgenito Torcal said the firm’s board of directors had unanimously approved a change in its capital restructuring in order to reduce its retained deficit of approximately P3 billion at end-2000.

The four-pronged strategy would involve: 1) a decrease in its authorized capital; 2) the offsetting of the resulting surplus from the capital reduction against the existing deficit; 3) a re-increase in authorized capital; 4) the issuance of new shares to increase the issued share capital.

Torcal said based on the plan, Nenaco will reduce its authorized capital from P4 billion to P400 million by reducing the number of its issued shares from four billion to 400 million each valued at P1.

The resulting surplus from the capital decrease will then be offset against the existing deficit, thereby reducing the latter by approximately 73 percent or P2.19 billion to a more manageable level of P810 million.

Nenaco will then re-increase its capital stock to P4 million and issue about 2.7 billion new shares, also at P1 par value against a debt conversion, thus increasing the issued share capital to roughtly P3 billion, Torcal added.

Last year, Nenaco remained in the red as it incurred a P693 net loss from operations, although this was lower than the P778-million loss in 1999.

Among the factors that contributed to the continued losses were the heightened competition brought about by the entry of the giant WG&A shipping line in its Bacolod home port; the contraction in the passenger and freight volume; as well as the doubling of fuel prices.

While company officials will see great potential over the long-term especially for the freight business which has been growing consistently and is not affected by the seasonality of the passenger side, its parent company Metro Pacific has been planning to dispose of Nenaco as MPC concentrates on its core business of property development.

MPC owns 55 percent of Nenaco. Over the past two years, MPC has sold off a number of its subsidiaries such as packaging firm Steniel Manufacturing, veterinary health unit Metrovet Inc., personal care products maker Metrolab Industries, and bottled water manufacturer Metro Bottled Water Inc. – Conrado Diaz Jr.