MANILA, Philippines - The steel fabrication unit of listed holding firm Phinma Corp. has secured a P600-million loan from two local banks.
The fresh funds will support the payment of debts and expansion projects, the company told the local bourse.
“Union Galvasteel Corp., a subsidiary of Phinma, obtained a five-year term loan from Security Bank Corp. in the amount of P300 million,†Phinma said.
On Monday, Union Galvasteel borrowed P300 million from BDO Unibank Inc.
The loan will be used for “the refinancing of a previous term loan to reduce interest cost, expansion of Union Galvasteel’s color coating line and permanent working capital,†Phinma said.
“The said loan is collateralized by a real estate mortgage on Union Galvasteel’s land, plant site improvements, buildings and installations, and machinery and equipment in Calamba City [in Laguna] and Davao City,†Phinma added.
The deal marked another transaction between Union Galvasteel and BDO. In September, the steel fabricator pre-terminated its long-term debts with BDO and Rizal Commercial Banking Corp. with a balance of P240 million.
In the nine months to September last year, the company sold five million sheets, up nine percent from 4.6 million sheets sold in the same period in 2011 given higher demand from the construction industry.
However, net income slipped to P57 million in the nine month period from P95 million a year ago as profit margin sank due to high operating costs.
The galvanizing line of Union Galvasteel was shut down in November 2011 to February 2012.
“Like any other company in the construction industry, the operations of Union Galvasteel is affected by seasonality demand,†Phinma said.
Specifically, demand for roofing materials is greater during the summer months starting December to May than during the rainy months of June to November, Phinma said.
Phinma, formerly Bacnotan Consolidated Industries Inc., is also into residential development (Phinma Properties), educational institutions (Phinma Education Network composed of Araullo University, Cagayan de Oro College, University of Pangasinan and University of Iloilo) and hotels (Microtel).