Victorias Milling to pare down debt in August

MANILA, Philippines - The country’s largest sugar miller Victorias Milling Corp. expects to pare down its debt to around P2.8 billion by August, the end of the current crop year, according to its top official.

VMC chairman Wilson Young said the firm would pay about P1 billion in debt in June as part of hardline efforts to reduce debt service costs, rebuild its balance sheet and restore liquidity.

“Total debt is P3.5 billion, we will pay about P1 billion in June this year.  This will result in the reduction of our debt to about P2.8 billion by end-August 31, 2013 crop year, representing principal and interest,” Young said in a text message.

In late December, VMC’s board approved the conversion of about P272.86 million convertible notes into equity and the prepayment of P1 billion in restructured loans in line with the debt restructuring agreement with creditors.

Holders of VMC’s debt notes have the option to convert their exposure into equity every year until the notes fall due in 2018 under its corporate rehabilitation plan.

The Lucio Tan group is the second biggest voting block in VMC with its 14 percent stake next to British Virgin Island-based firm Premier Network International Ltd., which owns about 25 percent of the sugar milling company.

The LT Group was VMC’s white knight after providing the necessary funds to keep the debt-laden sugar miller afloat.

Under its current management, VMC posted four years of consecutive growth, logging in a net income of P556 million for fiscal year ending August 2012, up 39 percent from P400 million in 2011. The company’s earnings amounted to P310 million and P60 million in 2010 and 2009, respectively.

The company also saw a marked improvement in its capital structure, posting a net equity of P1.8 billion this year from a net capital deficiency of P1.8 billion in 2005.

VMC’s continued efforts on machinery and equipment upgrade and modernization aimed at improving factory efficiencies and product quality, boosted the company’s bottomline.

As a result, raw sugar production increased by 12 percent while refined sugar production expanded by 37 percent, translating to higher revenues despite lower sugar prices.