CAT assets declared idle for future sale

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CENTRAL Azucarera de Tarlac Inc. (CAT), the listed sugar miller and refiner based in San Miguel, Tarlac, is not covered by the government’s agrarian reform program despite owning 627.9 hectares of land.

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This is what CAT’s own filing shows. The disclosure divides the company’s property into four “areas of reference on its existing use.”

The classifications described 3.3 million square meters as “not used in business and operation” and 2.2 million square meters as “held for sale and development.”

Because 957,789 square meters have been in existence as an industrial complex, CAT divided them into a 677,220-square meter factory area and 276,569-square meter administrative area.

These classifications and the numbers attributed to each indicate that CAT does not have tenants, exempting it from the coverage of the agrarian reform law. Such an arrangement benefits CAT Resources and Asset Holdings Inc., the new owners, for it does not have to deal with farmers who would have asserted their right as beneficiaries under the government’s agrarian reform law.

Substantial stockholders

Martin Lorenzo and Fernando Cojuangco are CAT’s two biggest stockholders with stakes of 37.28 percent and 35.82 percent, respectively. In addition, they own 20 CAT shares each that are lodged with PCD Nominee Corp.

Two other directors also hold 20 shares each. Vigor Mendoza 2nd and Fernand Victor Lukban also preferred to entrust their CAT shares with PCD Nominee.

As members of CAT’s seven-person board, Lorenzo, chairman and chief executive officer, and Cojuangco, president and chief operating officer, must be adept in corporate strategies. While CAT owns more than 627 hectares of land in Tarlac, they chose to buy a company “to ensure and increase the cane supply to be milled by CAT.”

Or is CAT afraid of farmers?

In acquiring 50,000 shares representing 100 percent of the outstanding capital stock of Agrikulto Inc., CAT paid P66 million in what was virtually an insider deal.  Agrikulto is a subsidiary of North Star Estate Holdings Inc. which is owned by Cojuangco.

Agrikulto, which leases sugar plantations instead of owning them, was what CAT needed to avoid dealing with farmers, something which the Cojuangco-owned Hacienda Luisita is not good at. In 1988, President Corazon Aquino even had the law amended as a solution to the family problem by allowing the incorporation of agricultural lands into stock corporations. By making the tenants their co-owners in a corporation, the farmers would not have any reason to fight their own company.

Failed scheme

Instead of sharing the farmlands with their tenants, the Cojuangcos issued them stock certificates, making them their co-stockholders of what was registered with the Securities and Exchange Commission in 1988 as Hacienda Luisita Inc.  (See Due Diligencer, The Aquinos’ Legacy, December 10, 2015)

The scheme to cheat the hacienda’s farmers of their right to own a piece of the Cojuangcos’ property instead of pieces of paper, did not succeed when the Supreme Court declared illegal the distribution of stock certificates instead of farm lots.

Eventually, Malacañang’s chief occupant went after Chief Justice Renato Corona for striking down his mother’s version of complying with the agrarian reform law. He may have succeeded in ousting the Chief Justice but his victory would hopefully only be temporary.

When his six-year term ends this year, he would need the legal assistance of all the lawyers in the employ of his administration to defend him against a litany of cases arising from presidential oppressions.

CAT’s financials

SGV & Co. is the independent external auditor of Central Azucarera de Tarlac. Its audit showed CAT had accumulated a deficit of P191.9 million in 2014; P313.15 million in 2013; and P449.69 million in 2012.

CAT finally reported retained earnings of P17.19 million on June 30, 2015, the end of its financial year. It reported net profit of P136.54 million in 2013; P121.25 million in 2014; and P144.31 million in 2015. These resulted from revenues of P1.01 billion in 2013; P988.68 million in 2014; and P1.02 billion in 2015.

Do these numbers suggest hopes of a recovery for CAT’s public stockholders who did not tender their shares when the new owners offered to buy them out at P91 per share?

The market reports showed CAT hit a 30-day high of P100 per share and dropped to a month’s low of P80.85. On January 4, it traded throughout the session at P99.95. The following day, it dropped to low of P99.95, its opening price, and closed at P100, its session high.

esdperez@gmail.com.

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