Vitarich files for rehab to raise capital

Listed Vitarich Corp. filed last Friday a petition for rehabilitation before the Regional Trial Court of Malolos, Bulacan to enable the company to raise fresh capital for expansion and allow the agri-based firm to return to profitability within 12 months.

Vitarich, which is currently under a restructuring agreement with major creditors, said the proposed rehabilitation program will allow the company to utilize its operating revenues to further grow its feeds business instead of merely allocating its earnings to debt and interest payments under the restructuring agreement.

"We need our revenues to sustain growth. Vitarich remains very solvent, yet we are being hampered by the restructuring program and we want to utilize our earnings to provide our customers with better products and services," president and chief executive officer Rogelio Sarmiento said.

Vitarich filed the rehabilitation petition in Bulacan, where the company has its corporate offices and production plant.

The company is a leading poultry and feeds producer but its profitability suffered during the Asian economic crisis in 1997 and the avian flu outbreak, forcing it to enter into a restructuring agreement with creditors.

"If we are allowed to utilize our earnings and temporarily suspend payments to creditors, Vitarich will be in a very good position to return to profitability in the next twelve months," Sarmiento said. "Our business fundamentals are good, and we continue to enjoy the trust and support of our customers and suppliers."

Aside from the suspension of debt and interest payments, Vitarich is also seeking to stretch its current loan repayment agreement with creditors from 12 years to 15 years, and to be granted graduated interest rates.

Sarmiento said his company has religiously paid its creditors some P2 billion in maturing obligations over the past two years under the restructuring program but the arrangement made it difficult for Vitarich to expand its business due to lack of capital.

He said Vitarich filed the rehabilitation petition under Presidential Decree 902-A, a special law that allows only financially solvent corporations to seek judicial intervention provided that it can present a feasible and doable plan.