MANUFACTURING firm D&L Industries, Inc. said its board of directors had approved a plan to offer peso-denominated fixed-rate bonds worth up to P5 billion to fund the company’s expansion plans in Batangas.
In disclosure to the exchange on Tuesday, the company said the board approval set the offering’s principal amount at P3 billion, with an oversubscription option of up to P2 billion. The bonds will have a tenure of three to five years.
“With interest rates still remaining low, we believe it’s an opportune time to tap the debt market. Our maiden bond offering will be a useful financial exercise for the company and will allow flexibility for future opportunities we can potentially take advantage of,” D&L President and Chief Executive Officer Alvin D. Lao said in a statement.
The offer is subject to the requirements of the Securities and Exchange Commission, the Philippine Dealing and Exchange Corp., and other regulators.
D&L said it would release further details on the offer once it has been finalized.
The company’s Batangas plant has a total estimated capital expenditure of P8 billion. Construction began in late 2018, with some P4 billion remaining to be deployed for the project. It is expected to be completed by the end of the year.
The plant will be used for the company’s food export business and its oleochemicals segment. It will also allow the company to manufacture downstream packaging.
“For instance, while the company primarily sells raw materials to customers in bulk, the new plants will allow it to ‘pack at source.’ This means that D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products,” D&L said.
“This will enable D&L to move a step closer to its customers by providing customized solutions and simplifying their supply chain, which is of high importance given global logistical challenges and concerns,” the company added.
The plant is anticipated to boost the company’s growth, as D&L aims to expand in international markets and as the company plans to develop more coconut-based products.
“We believe that the future growth prospects of the business remain strong, and we look forward to our new plant coming online by the end of the year,” Mr. Lao said.
“The resiliency that the company showed last year highlights the relevant nature of our businesses’ catering to basic industries, and our operational adeptness as even in the worst of times, even at the peak of the lockdown, we never saw our net income turn negative,” he added.
In 2020, the company earned P515 million in the first quarter, P287 million in the second quarter, P573 million in the third quarter, and P637 million in the last quarter.
In the fourth quarter, the company’s income grew by 8% compared with the P590 million generated in the same period in 2019. The company said it “signifies the inflection point in earnings growth.”
D&L’s net income for the year amounted to P2.01 billion, 23% down from P2.62 billion in 2019.
“We believe that the worst is over and we are in a very good position to further recover as the economy continues to reopen,” Mr. Lao said.
On Tuesday, D&L shares at the exchange rose by 2.11% to close at P7.25 apiece from P7.10. — Keren Concepcion G. Valmonte