Roxas Holdings to raise $40M for plant upgrade

MANILA, Philippines - Listed sugar miller Roxas Holdings Inc. (RHI) plans to raise $30 to $40 million to finance a three-year program for the upgrade of its existing plants.

RHI operates two sugar mills located in Nasugbu, Batangas and La Carlota, Negros Occidental.

In an interview during the company’s annual stockholders meeting in Makati yesterday, RHI president and CEO Renato Valencia said the company intends to raise the funds through a stock offering which would comprise 20 percent of company ownership.

“That will be more or less what the shareholders would be willing to accept,” he said.

Valencia said RHI is in a good position to pursue a three-year plant upgrade program.

“The upgrade will be over a period of three years. The timing is better now,” he said.

RHI Chairman Pedro Roxas said it is yet to be determined if the stock offering could be carried out within the year.

“That is our target but we are still in very early stages of engagement. We are also still waiting for feedback (from shareholders),” he said.

In his report to shareholders, Roxas said the capacity utilization of the mills is targeted to reach an average of 85 percent by 2015.

The company posted a record net income of P667 million in its fiscal year ending September 2012, the highest in its 85-year history.

The record profit came after the company suffered consecutive net losses of P742 million for 12 months ending June 30, 2011 and  P765 million for three months ending Sept. 30, 2011, its new fiscal cut-off.

This was attributed to new management’s focus on improving sugar sales margins and cost-containment measures.

The company reported a net income of P34 million for the first quarter of its new fiscal year ending in Dec. 31, 2012, a reversal from  a net loss of P32 million for the same period the previous year due to lower operating and financing expenses during the period.

In the next three years, RHI intends to undertake strategic measures to prepare for increased global competition that would be brought about by the reduction in tariff of sugar imports from 48 percent in 2010 to five percent in 2015 within the ASEAN region.