MONDE Nissin Corp.’s board of directors has decided to reallocate the initial public offering (IPO) proceeds initially budgeted for capital expenditures (capex) to repay the majority of its remaining term loans worth P15.6 billion.
“It was determined that the most prudent course of action for shareholders is to pay down debt, resulting in significant interest savings and a reduction in interest rate risk,” said Henry Soesanto, chief executive officer of Monde Nissin.
The company earmarked over half or P26.5 billion of its IPO proceeds for its capex. It raised P48.6 billion when it debuted at the local bourse in June, the biggest-ever IPO in the country.
Monde Nissin said the decision to reallocate these funds would lead to around P700 million in interest expense savings, assuming current rates.
Despite the move, Monde Nissin said that it is not changing the plans stated in its offer prospectus.
“We continue to have strong conviction of the long-term growth opportunities of our businesses and capital expenditure plans and growth strategy will remain unchanged,” Mr. Soesanto said.
Monde Nissin said in its prospectus that it plans to finance key projects for its food and beverage business in the Asia-Pacific, which include the completion of its facility in Malvar, Batangas and to fund the increase in capacity for its innovation projects such as new healthy noodle lines, operational facility, and supply network transformation.
The company is also looking to expand its meat alternative business via product development capabilities and manufacturing improvement through building a new research and development facility.
“Funding will be provided by our strong operating cash flows supplemented with existing lines of credit if needed,” Mr. Soesanto said.
On Tuesday, shares of Monde Nissin at the stock market went up by 0.83% or 14 centavos to close at P16.92 each. — Keren Concepcion G. Valmonte