RFM sets terms for issuance of property dividends

RFM Corp., the food and beverage concern of the Araneta-Concepcion family, has set the terms of its proposed issuance of property dividends to shareholders.

In documents filed with the Securities and Exchange Commission, RFM said it will issue to shareholders 774.08 million shares in Swift Foods Inc. The shares are valued at P753.43 million or P0.973 per share.

The shares to be issued as property dividends represent the entire holdings of RFM in SFI, which account for 96.44 percent of the outstanding capital of the listed meat manufacturing firm.

As there are 1.55 billion RFM common shares outstanding, two RFM common shares are needed to receive one SFI common share. Any fractional shares relating to the property dividends will be paid in cash based on the value of SFI shares in the records of RFM.

The record date of the property dividends will be 10 days from approval of the declaration by stockholders.

The issuance of property dividends, which is subject to the approval of the SEC, is part of the group’s plan to spin off its poultry unit to be owned directly by RFM shareholders.

To further strengthen its branded food group, RFM had deemed it best to directly engage in the business of processed chilled and canned meat products, by acquiring SFI’s corollary business of marketing, distributing and selling of the same.

RFM said the inclusion of branded processed chilled and canned meat products to the branded food group is expected to result in substantial synergies, cost efficiencies and better integration of the brand-building efforts of the group.

The branded food group includes White King mixes, Fiesta pasta, Sunkist juice and powder drinks and the Selecta Moo milk drinks, and Aqua bottled water.

As a result of the spin-off, SFI will engage only in the poultry business. It is now in the process of finalizing its business plan but it has made earlier pronouncements that its poultry business shall continue to accelerate efforts to cut costs and improve on its production yields and operational productivities.

SFI is planning to shift some of its production capacities to low-cost producing regions like Mindanao and Cagayan Valley. It is also currently developing further its high value added product lines like marinated cut-ups and lean meats as well as its exportable product lines.

The Philippine poultry sector has been adversely affected by the continuing influx of low-priced imported chicken products, usually from countries that put minimal value on "dark meat" chicken parts. It has also been hobbled by the relatively higher cost of local corn production, the main raw material in the manufacture of feeds for chicken.