RFM eyes sale of more assets to redeem maturing bonds

Food and beverage conglomerate RFM Corporation will be selling off more of its non-core assets as part of a fund-raising program to pay off $65-million in maturing bonds.

RFM chief financial officer Meldin Al Roy said that while they expect to realize $36 million in net proceeds from the sale of its two subsidiaries – Consumer Savings Bank and the Nasdaq-listed PSi Technologies Holdings – the amount is not enough to cover the redemption payments for the convertible bonds.

RFM’s wholly owned subsidiary, RFM Capital Ltd., issued the 10-year bonds in May 1996 in the principal amount of $65 million which will mature in 2006 at an interest rate of 2.75 percent per annum.

Among the terms in the bond float is the option for holders to redeem their bonds on May 30, 2001 at a redemption price equal to 128.71 percent of the principal amount.

"RFM intends to honor its obligations to bondholders, but will need more time to do so," Roy said, adding that the company will be meeting with the bondholders in the near future.

Earlier, the Concepcion-controlled conglomerate said they needed more time in meeting the redemption payments due to a temporary cash flow mismatch and had planned to meet the obligations through a combination of asset sale, new borrowings and internally generated funds.

The bonds were also a major problem for RFM as its net earnings position was jeopardized in the past two years due to heavy provisioning for foreign exchange losses as the peso deteriorated against the dollar.

RFM earlier announced that it was focusing its business on the branded, high-margin units comprising the so-called refreshments business (softdrinks, juice and ice cream), and was moving away from the traditional food lines.

The company banks on Selecta Dairy Products for its ice cream and juice businesses; Cosmos Bottling for its softdrinks line and Swift Foods for processed food, among others.

After the sale of Consumer Savings Bank and PSi Technologies, RFM had disposed of its "Blue Bay" brand under the tuna division to Canter Management Ltd. for an undisclosed amount.

Other RFM subsidiaries include SouthStar Bottled Water Co. Inc., RFM-Indofood Philippines, Conglomerate Securities & Financing Corp., Rizal Lighterage Corp., RFM Properties and Holdings Inc. and Rolling Pin Corp.

At end-March 2001, the RFM Group has total assets worth P23.711 billion.