PSE freezes trading of Vitarich shares

The Philippine Stock Exchange (PSE) suspended yesterday trading in shares of poultry firm Vitarich Corp. after the latter sought corporate rehabilitation before the Bulacan Regional Trial Court.

Vitarich closed at 22 centavos as of its last trading date.

Crippled by huge debts amounting to P3.2 billion, Vitarich sought a debt reprieve to allow it to map out a viable rehabilitation plan aimed at bringing the company back to profitability within 12 months.

Vitarich incurred a higher net loss of P50 million in the second quarter this year after booking financing charges of P90.4 million, compared to a loss of P38 million in the same period last year.

The proposed rehabilitation program calls for the restructuring of debts to creditors to allow the company to raise fresh capital for expansion. Vitarich, in particular, is seeking to stretch its current loan repayment agreement with creditors from 12 years to 15 years, and to be granted graduated interest rates.

Vitarich said the proposed rehabilitation program will also 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," Vitarich president and chief executive officer Rogelio Sarmiento said.

Sarmiento said the 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.

"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 12 months. Our business fundamentals are good, and we continue to enjoy the trust and support of our customers and suppliers," he said.

Sarmiento cited Presidential Decree 902-A as basis for seeking debt relief.

PD 902-A is a special law that allows only financially solvent corporations to seek judicial intervention provided that it can present a feasible and doable plan, as basis for seeking debt relief.

Vitarich is a leading poultry and feeds producer but it experienced cashflow problems during the Asian economic crisis in 1997 and the avian flu outbreak, forcing it to enter into a restructuring agreement with creditors.