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MANILA, Philippines -- Victorias Milling Corp. (VMC) is proposing to prepay a portion of its debt in preparation for tighter competition once trade barriers drop across Asean in 2015.
In a disclosure to the Philippine Stock Exchange, the country’s biggest sugar miller said it is proposing to prepay convertible notes of up to P500 million and the settlement of P1.48 billion in restructured loans.
The company also wants to reduce the interest rate on restructured debt from 10 percent to eight percent for the peso-denominated loan, and from six percent to five percent for the foreign-denominated loan.
VMC's restructured loan was pegged at P2.69 billion at end-August 2011, while its convertible notes stood at P1.98 billion as of January 2012.
Among amendments to the debt restructuring agreement is the voluntary prepayment on the restructured loan without any penalty from any source; pro-rata application; and the allocation of a joint venture seat in the board to the director who will be elected as VMC president.
"This will improve VMC debt-to-equity ratio and save up to P180 million this year in interest payments once the Securities and Exchange Commission and the creditors approve the proposed amendments," said Wilson Young, chairman of the sugar miller.
VMC creditors have until May 31 to comment on the said proposal, he added.
The move to settle its debt was among the measures that VMC is undertaking in preparation for the zero-tariff regime under the Asean Free Trade Area beginning 2015, Young said.
In March, the SEC lifted the trading suspension of VMC after the company was cleared of misrepresentation in its regulatory filings and on the back of its compliance with its rehabilitation plan.
But trading of VMC shares at the local bourse will remain suspended pending its compliance with outstanding obligations.
VMC shares were last traded on October 8, 1997 at P0.29 each.
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