Victorias Milling needs P8 billion to stay afloat - Mier

Sugar miller Victorias Milling Corp. (VMC) needs around P8 billion to pay its debt and upgrade production facilities to ensure its continued operations.

At the sidelines of the company’s stockholders’ meeting yesterday, VMC chairman Omar Mier said the sugar firm is in need of fresh capital to stay afloat especially with the anticipated elimination of all tariffs on imported sugar by 2010.

Mier said that while all capital, operating, and debt servicing requirements are fully covered this year, 2010 would be a crucial year for the company and the sugar industry as well.

Under the ASEAN Free Trade Agreement (AFTA), the 10-percent tariff on sugar will be reduced to zero by next year. Sugar manufacturers have asked the government to reconsider.

Mier said rhum maker Tanduay Holdings Inc, which has a 10 percent stake in VMC, has yet to make a decision on whether or not it would inject additional cash into the debt-strapped firm.

From a high of P8 billion, VMC’s debt has gone down to P6.2 billion.

“We need to pay down if not eliminate out our debt in order to operate more efficiently,” Mier said.

 Mier said VMC is open to the possibility of a new group coming in to help it ride out the bleak global market conditions while pointing out that Tanduay continues to support the rehabilitation efforts of the sugar firm.

Should it fail to get fresh capital, VMC might seek a restructuring of its debt obligations, Mier said.

He said the company is also planning to sell non-core assets including its food processing business to raise needed funds.

Mier said the company is also hoping to revive trading activity at the Philippine Stock Exchange. Trading of VMC shares has been suspended since October 1997 and last traded at 87 centavos.

VMC, which filed for corporate rehabilitation in July 1997, has been posting profit for three consecutive years now. As of its fiscal year ending Aug. 31, 2008, the company posted a net income of P111.05 million or 38.1 percent higher than the P80.4 million recorded in the previous year. Revenues from operations, however, dropped to P3.44 billion, from P3.68 billion.

Mier said the sugar firm is expected to post a profit this year in spite of the difficult business environment.

VMC, accounting for about 14 percent of the country’s total output of raw sugar and at least 30 percent of refined sugar, was founded in 1919 by the late Don Miguel Ossorio. It started as a sugar mill before it expanded into a sugar refinery, eventually becoming a regular exporter of sugar to the United States.

Weighed down by its huge debt and an overly ambitious diversification program, VMC was forced to file a petition for suspension of debt payments during the height of the Asian currency crisis.