Roxas Holdings, Inc. and its subsidiaries have agreed to sell a sugar mill and other assets to consumer goods company Universal Robina Corp. (URC) as part of the sugar miller’s efforts to reduce its debt.
In a disclosure to the stock exchange on Friday, Roxas Holdings said the sale of the assets, which include an ethanol plant and other investment properties in La Carlota City, Negros Occidental, is subject to the approval of the Philippine Competition Commission and creditor banks.
Roxas Holdings and URC did not disclose the value of the deal.
Celso T. Dimarucut, executive vice-president and chief financial officer of Roxas Holdings, said the sale came after the company’s decision to de-risk the business by cutting existing debts.
“Our plan is to prepay all long-term debt and reduce short-term debt to levels sufficient for our working capital needs,” he said.
Roxas Holdings President and Chief Executive Officer Hubert D. Tubio said the sale of the La Carlota assets would allow the company to refocus its resources on rebuilding its Nasugbu sugar milling and refining facilities, among others.
“Over the years, demand for quality Central Azucarera Don Pedro (CADP) refined sugar has not waned even with the influx of imports. Industrial customers still prefer sourcing their requirements from CADP considering its proximity to the National Capital Region,” he said.
Chairman Pedro E. Roxas said the transaction would not raise significant competition concerns for the company as there are many players in Negros, which is considered the country’s sugar capital.
“We are hopeful that we can get the necessary approvals before the start of the next Crop Year,” he said.
On May 21, the company said that it had reduced its losses attributable to equity holders to P92.75 million during the second quarter of its fiscal year, ending March. Roxas Holdings revenues during the quarter fell 8.03% to P2.52 billion.
Separately, URC on Friday said the deal would achieve “operational synergies” between La Carlota and the Gokongwei-led company’s operations in sugar.
“[T]his acquisition is also intended to help sugarcane planters increase their productivity, as well as help local communities in Negros by providing more opportunities,” it told the stock exchange.
URC also said that the acquisition would allow it to continue in its efforts to support the development of the sugar industry.
On Friday, shares in Roxas Holdings rose 9.09% or P0.13 to close at P1.56 each, while URC shares fell 0.74% or P1 to end at P134 a piece. — Revin Mikhael D. Ochave
