Tanduay to issue P5-billion fixed rate retail bonds

MANILA, Philippines - Tanduay Distillers Inc. (TDI), the liquor unit of tycoon Lucio Tan, will issue P5 billion worth of five-year fixed-rate retail bonds to refinance debt and fund corporate expenses.

In a disclosure to the Philippine Stock Exchange, TDI said it has tapped First Metro Investment Corp. and PNB Capital & Investment Corp. as joint issue managers for the issue.

Credit Rating and Investors Services Philippines Inc. (CRISP) has assigned its highest rating of “AAA” to TDI’s proposed bond issue. The rating indicates strongest capacity and very low probability of default by a debt issuer.

In assigning the rating, CRISP took into account the following: strong Tanduay brand equity; solid operation and strong financial performance and operating efficiencies characterized by excellent integration of distillation process; and environment-friendly technology that result in cost savings.

Gross profit margin has been growing at an average of 21.4 percent over the last five years.

Tanduay, which has been in business for 155 years, is the second largest rum producer in the world. It operates four bottling plants and two alcohol distilleries in strategic locations in the Philippines.

Its parent firm, Tanduay Holdings Inc., is eyeing a net income of between P300 million and P400 million on the back of a projected five percent rise in sales volume this year.

Last year, Tanduay reported a more than three-fold increase in its net earnings mainly due to higher sales and effective cost-saving strategies. From a meager P100.6 million in 2007, Tanduay’s net income rose to P338.2 million.

Net sales, on the other hand, grew 18.3 percent to P9.05 billion from P7.65 billion, helped by price adjustments and sustained advertising and promotional campaigns.

Sales volume rose 14 percent as a result of the favorable economic performance in southern Philippines, the company’s market stronghold.

Tanduay’s Five Year Rum brand continued to lead all brands, capturing 79 percent of total sales.

The opening of a new production facility in Cagayan de Oro, Misamis Oriental also contributed to sales growth as its products became more accessible and readily available in the Mindanao region. The CDO plant currently serves 50 percent of the region’s requirements.