Press Releases / News Updates
Roxas Holdings Secures P4.69 Billion Loan to Bankroll Expansion
The strategic expansion program of listed sugar conglomerate Roxas Holdings, Inc. (RHI) is now underway with the recent completion of a P4.69 billion-loan from BDO-EPCI, Inc. to bankroll its capacity expansion projects and building of an ethanol-fuel plant.
The capital will be used to bankroll the expansion of the company’s sugar milling and refining subsidiaries to increase its revenue-generating capability and enhance its cost-competitiveness to place RHI in a competitive advantage against low-priced imported sugar that will enter the country beginning 2010.
Sugar tariffs will be lowered to 5 percent from 38 percent under the ASEAN Free Trade Agreement which the country signed in 1992.
P4.7 billion of the capital will be allocated for the purchase of two sugar mills abroad and other capacity expansion projects, P1.2 billion for the setting up of the ethanol plant and the rest, to refinance existing debts.
RHI is set to borrow another P2 billion from two other banks in the coming days to complete the P6 billion capital it needs to finance the expansion projects.
RHI earlier engaged Macquarie Securities (Philippines), Inc. as its financial adviser to assist the company in its strategic initiatives and capital raising activities.
“We are optimistic that the strengthening and expansion of our sugar business will position us to overcome the threats and take advantage of the opportunities the domestic sugar industry will face,” RHI Chairman and Chief Executive Officer Pedro Roxas said.
“We are implementing new systems that will ensure our survival during this period and enable us to remain as a strong industry leader,” he added.
RHI is acquiring two sugar mills from the United States and Australia, which will increase the company’s capacity by 52 percent.
“The new mills will also bring down our operational costs, particularly on fuel, and will serve as a takeoff point for our entry into the energy sector,” Mr. Roxas added.
The company is diversifying its business activities by entering into the energy sector through manufacturing fuel ethanol to take advantage of the definite market brought about by the enactment of the Biofuels Act of 2006. The law mandates the use of locally sourced biofuels.
“The Biofuels Act gives RHI an avenue for growth outside of sugar. The absence of fuel ethanol producers in the Philippines to date, as well as the guaranteed market for ethanol, gives us a competitive advantage, Mr. Roxas explained.
RHI President and Chief Operating Officer Francisco del Rosario, Jr. disclosed the company is also planning to expand and build its market share by strengthening its traditional market and capturing more industrial customers to expand its clientele.
“We are also planning to enter new local and regional markets through geographical expansion,” Mr. del Rosario added.
Mr. del Rosario furthered the the absence of value-added sugar products such as low-calorie sugar and other sugar blends opens an opportunity to the company to be the first mover in these niche products through more developed research and development initiatives and niche marketing efforts.
RHI also plans to maintain cost competitiveness through the reduction of fuel costs and the automation of certain factory and information systems processes. Bunker fuel consumption is currently 22 percent of the refining costs.
Refer to: Celest Jovenir Investor Relations and Corporate Communications Tel: (632) 810-8901 to 06 ext. 1811 Email: firstname.lastname@example.org