Gokongwei keen on Victorias Milling

JG Summit Holdings Inc. of the Gokongwei Group emerged yesterday as a potential "white knight" that could save Victorias Milling Corp. (VMC) as the Gokongwei-owned holding company offered a total P2.3-billion package for the sugar milling firm’s funding and debt repayment needs.

In a disclosure to the Philippine Stock Exchange, JG Summit assistant corporate secretary Rosalinda Rivera said the company, through its financial adviser Argosy Ltd., had proposed to VMC and its secured and unsecured creditors the capital infusion of P300 million into VMC in the form of a senior loan convertible to equity.

In addition, Rivera said JG Summit has offered to shell out an aggregate amount of P2 billion to "acquire all the rights, title, and interests of both VMC unsecured and secured creditors over their respective VMC shares, VMC convertible notes, and remaining debt and accrued interests."

"Kindly note that the foregoing are still subject to further negotiations between the relevant parties, we shall inform you of any material developments regarding these matters at the proper time," Rivera clarified.

VMC, the largest sugar mill operator in the country and one of the largest in the Southeast Asian region, has been under a debt relief program with the Securities and Exchange Commission since mid-1997 as it incurred heavy losses from operations due to the prolonged slump in the sugar industry at the time.

Last December, VMC stockholders approved the firm’s quasi-reorganization and elected a new set of directors led by chairman Omar Byron Mier and president Arthur Aguilar. Based on the SEC-approved rehab plan, the company has until April 15 or 120 days after the first board meeting to raise P300 million as additional capital infusion.

Under the quasi-reorganization, VMC’s 27 creditor banks will be able to convert P1.1 billion in loans into about 70 percent of VMC’s equity, while another P2.4 billion in debts will be restructured into a 15-year term loan.

For the past two years, VMC used its pre-tax income of about P938 million to expand the mills’ capacity, rehabilitate factory equipment, environmental compliance, update tax and SSS liabilities, infrastructure and payables to retirees and retrenchment.

Based on the rehabilitation plan, VMC will cut down its labor force to 1,700 from a high 3,200, using the P300 million that will come in April this year. It has also scheduled to pay P313 million in loans falling due to creditors by late this year.

The VMC board is expected to discuss the JG Summit offer in its meeting today, particularly on the loan conditions and how the money will be spent.

It was earlier reported that another business tycoon, Andrew Gotianun of the Filinvest Group, had offered to help raise the P300 million for the required capital infusion in the listed sugar milling firm.

The Gotianun family also controls East West Banking Corp., which has the second biggest exposure in VMC with 5.76 percent or P91.8 million of the aggregate P1.1-billion debts, after the P162-million loan exposure of the Philippine National Bank.