Roxas Holdings eyes strategic or financial partner for global presence

Publicly-listed sugar conglomerate Roxas Holdings Inc. is considering bringing in a strategic or financial partner, possibly next year, in line with its goal to extend its presence globally as it seeks to develop a more solid platform to support sustainable growth

At the company’s stockholders meeting yesterday, Roxas Holdings chairman Pedro Roxas said the group is in talks with several groups, both local and foreign, that have signified their interest to invest in the company and its projects. 

 “There were initial expressions of interest for our sugar operations but talks remain ongoing with these parties,” Roxas said.

Roxas said the company has tapped Macquarie Securities as its financial advisor. “They’re putting together a plan that will set out the terms and conditions for the entry of potential investors,” he said.

The plan is subject to favorable market conditions, Roxas said. “We will pursue talks when we feel that the conditions are ripe,” Roxas added.

 “We believe that building strategic partnerships is crucial to the group’s continuing growth and success…It is our intention to spread out our leadership not only in the Philippines but on a regional scale as well. This is why we have opened opportunities for talks with strategic partners,” Roxas said.

To prepare for its future growth, Roxas Holdings is undertaking a corporate reorganization that will involve the consolidation of all the group’s sugar businesses into one listed company to eliminate the extra holding company layer that exists at present. The move is aimed at reducing redundancies and improving overall efficiency.

Under the plan, Roxas Holdings will purchase all operating subsidiaries of CADP Group Corp. (CADPGC) namely, Central Azucarera Don Pedro Inc., Central Azucarera De La Carlota, CADP Farm Services, Jade Orient Management Services, and CADP Consultancy Services. The shell company of CADPGC , in turn, will be sold to Roxas & Co. Inc. (RCI), the flagship company of the Roxas Group.

 “With this, we envision a cleaner and more transparent corporate structure with Roxas Holdings as the lone arm for the group’s sugar subsidiaries,” Roxas said.

The strategic move serves as a takeoff point for the group’s entry into the energy sector to allow it to take advantage of the definite market for fuel ethanol brought about by the Biofuels Act of 2006, which mandates the use of locally-sourced biofuels.

“We are full steam ahead in our foray into manufacturing fuel ethanol. The construction of the bioethanol plant of Roxol Bioenergy Corp., the company we established for this venture started in August 2008 and is expected to be completed by late 2009,” Roxas said.

India-based firm KBK Chem-Engineering was tapped to design, build and activate the plant’s production facilities and equipment on a turnkey basis.

The P1 billion turnkey bioethanol plant in Negros Occidental will have an estimated capacity of 100,000 liters a day or 30 million liters yearly.

The group had obtained a total of P6.7 billion in loans which will be sufficient to fund the acquisition of two sugar mills abroad, the establishment of an ethanol plant and expansion of its refinery.

The group is 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 5 percent from 35 percent beginning in 2010 in line with the tariff reduction scheme of the ASEAN Free Trade Agreement.

Roxas said the company is also mulling over the possibility of doing a follow-on offering to raise additional funds for its diversification projects by 2009 but emphasized that the timing for this would depend on market conditions.