Vitarich OKs P2.4-B debt-to-equity deal

MANILA, Philippines - Animal feeds and livestock firm Vitarich Corp. is set to write off more than P2 billion worth of liabilities in its books through a debt-to-equity conversion to complete its corporate rehabilitation.

In a regulatory filing, Vitarich said its board of directors approved the “conversion of part of its debts to Kormasinc Inc. amounting to P2.376 billion into equity of the corporation at a ratio of 1:1 or one common share of stock for every P1 debt.”

Of these debts, P90.03 million will be paid through the issuance of 90.03 million unissued Vitarich shares. This will allow Kormasinc to own nearly a fifth of the agribusiness firm.

“The amount of P2.286 billion shall be applied as payment for the additional shares of stock, which shall be issued out of the increase in the authorized capital stock upon approval of such increases by the Securities and Exchange Commission,” Vitarich said.

In June last year, the firm announced its plan to raise its capitalization to P1.5 billion from P500 million to facilitate the entry of new investors.

Vitarich, which used to lead the poultry industry, has been under corporate rehabilitation since 2006 due to tight liquidity problems resulting from the Asian currency crisis and the avian flu outbreak in 2003.

At the height of the financial crisis, Vitarich’s debts stood at P3.23 billion. As of end-June, the company had P2.23 billion worth of restructured debts, almost the same as the December 2012 figures.

Vitarich has been unloading non-core assets to service debt payments. In 2011, it sold several properties worth as much as P202.34 million to pay down debt.

Under the corporate rehabilitation plan, management committed to corporate branding and image rebuilding; launching of new products in the market; expanding sale and distribution networks; strengthening business ties with trading partners; and continuously improving product quality thorough the rehabilitation and standardization of certain plants to qualify for international standardization and accreditations.

Incorporated in 1962 by the Sarmiento family, Vitarich is engaged in the production and distribution of various poultry products such as live and dressed chicken, day-old chicks and animal and aqua feeds, among others. Vitarich’s day-old chicks are supplied to its contract growers and sold to commercial broiler producers.

Its subsidiary Gromax Inc. continues to engage in the manufacture and distribution of animal health and nutritional products.

In the first half, Vitarich’s net loss of Vitarich narrowed to P14.63 million from P85.15 million a year ago, driven by an P82.76-million gain due to the reversal of long outstanding payables. Its sales, however, fell nearly six percent to P1.38 billion from P1.47 billion last year.