With its near exit from corporate rehabilitation, Filipino agri-feeds pioneer Vitarich Corp. is hoping to eliminate its debt by the end of the year with help from the launch of new products and its biggest asset divestment in place.
The company, which used to be the leader in the poultry industry, was placed under corporate rehabilitation in 2007 due to liquidity problems triggered by the Asian currency crisis and the outbreak of avian flu in 2003.
On Friday, Vitarich applied for a petition with the rehabilitation court to declare that the rehabilitation of the company has been successfully completed.
“We expect to be officially out [of corporate rehabilitation]by September this year and in terms of benefits, there will be a lot of benefits. We will be able to tap banks. It opens all the doors. We are very excited,” Vitarich Chief Operating Officer and Executive Vice President Ricardo Manuel Sarmiento said in an interview with reporters on Monday.
As part of the settlement of its financial obligations, Vitarich Corp. is undergoing a debt-to-equity conversion with two companies and has recently sold a piece of property in Marilao, Bulacan to a listed real estate company, a transaction deemed as the largest asset divestment the company has ever done.
Sarmiento specified that the company made a total of P610 million from the sale of its Marilao property in Bulacan to mass housing developer 8990 Holdings Development, Corp.
According to him, proceeds from the sale will be used to pay off a large portion of its remaining debt, aside from providing the company with additional working capital.
For the debt conversion, two companies, ADM Capital and Altus Capital, agreed to pay off a large amount of the company’s overall debt in exchange for significant ownership in the company.
Sarmiento explained that global investment firms ADM Capital and Altus Capital partnered to invest in the rehabilitation of the company through creditor Kormasinc Inc, a special purpose company that was set up to restore Vitarich to full financial health.
ADM Capital is a global investment manager that is focused primarily on recovery and special situations opportunities in emerging markets, while Altus Capital Partners, Inc. is a Philippine-based distressed debt and special situations investment manager focused on Southeast Asia.
The debt conversion covered P2.38 billion of the company’s total debt of P3.2 billion. Including some of the proceeds from the sale of its Marilao property, the company is left with an obligation of about P300 million.
When asked when the company plans to fully settle its debt, Sarmiento only said, “It could be settled within the year”.
“We are still talking to our creditor how to settle that. It could also be debt to equity. What’s important is we will be out of the rehabilitation. We are actually working on that,” he added.