Roxas Holdings to absorb CADP Group for P4 B

Sugar conglomerate Roxas Holdings Inc. (RHI) said it will absorb all assets and operating companies of its main subsidiary CADP Group Corp. worth more than P4 billion.

In a disclosure to the Philippine Stock Exchange, RHI said its board approved a proposal to acquire P115.8 million worth of the CADP Group’s net assets as well as the purchase of Batangas-based Central Azucarera Don Pedro Inc., Central Azucarera de la Carlota in Negros Occidental, CADP Farm Services Inc.,  Jade Orient Management Services Inc. and CADP Consultancy Services Inc.

RHI’s consolidated sugar manufacturing subsidiaries under the CADP Group are the wholly-owned Central Azucarera Don Pedro and Central Azucarera de la Carlota, making it the largest producer of raw sugar and the second largest refiner in the country, contributing 19 percent and 20 percent of annual production, respectively.

Also included in the proposed transaction is the CADP Group’s 45- percent stake in Hawaiian Philippine Co. and its 67-percent equity in Najalin Agri-Ventures Inc. for a combined value of P3.84 billion. 

Aside from this, RHI will also assume the liabilities of the CADP Group amounting to P378.81 million.

RHI said as a shell company, the CADP Group will then be merged with unlisted holding firm Roxas & Co. at a share ratio of 11.71 CADP shares for one Roxas & Co. share, resulting in a P3.93-billion company with Roxas & Co. as the surviving entity.

RHI is considering bringing in a strategic partner to support its diversification into bioethanol production, as well as 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.

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 Biofuels Act of 2006 which mandates the use of locally-sourced biofuels.

The group has obtained a total of P6.7 billion in loans which will be used 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 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 tons by October 2009. 

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