Roxas Holdings seeks strategic partner

Sugar conglomerate Roxas Holdings Inc. (RHI) is considering bringing in a strategic partner possibly next year to support its diversification into bioethanol production, and the capacity expansion of its sugar business.

RHI chairman Pedro Roxas said the company is in talks with four groups, both local and foreign, that have expressed interest to invest in the company or its projects.

“We hope to firm up plans by next year. We still need to discuss the terms. We might issue new shares to accommodate the entry of new investors but nothing has been finalized yet,” he said.

“Timing would be an issue. We want to get the right value for our shares,” he added.

Roxas said building strategic partnerships is crucial to the continuing growth and success of the company, which has taken a new strategic direction amid an increasingly competitive global environment.

RHI, through unit Roxol Bioenergy Corp., will build a P1-billion turnkey bioethanol plant in Negros Occidental to take advantage of the opportunities brought about by the passage of the Bio fules Act of 2006 mandating the use of locally-sourced biofuels.

The group obtained a total P6.7 billion in loans to cover the acquisition of two sugar mills abroad, the establishment of an ethanol plant and repayment of debt.

Slated for completion this year, the ethanol plant will have an estimated capacity of 100,000 liters a day or 30 million liters yearly.

The acquisition of new mills, on the other hand, is expected to bring down the group’s operational costs, particularly on fuel, and will serve as a takeoff point for the group’s entry into the energy sector. 

The group is also expanding the operations of its sugar milling and refining subsidiaries to increase revenue-generating capability and enhance cost-competitiveness. The first phase expansion will boost existing capacity to 14,000 tons per day by November this year and will increase further to 18,000 by October 2009. 

The expansion is in preparation for the lowering of sugar tariffs to five percent from 35 percent beginning 2010 in line with the tariff reduction scheme under the ASEAN Free Trade Agreement.

The Roxas Holdings Group, through Central Azucarera Don Pedro, remains the largest producer of raw sugar and the second largest refiner in the country , contributing 19 percent and 20 percent of annual production, respectively.

RHI president and chief operating officer Francisco Del Rosario Jr. said the group is also planning to enter new local and regional markets through geographical expansion.