Expects to exit corporate rehab by September
Ricardo Manuel M. Sarmiento, chief operating officer, executive vice president, and sales and marketing director of Vitarich Corp.
MANILA, Philippines – Vitarich Corp., one of the country's pioneers in feeds and poultry production, is looking to revive its agri-business as it expects to settle all its debts before the year ends.
Vitarich executive vice president and chief operating officer Ricardo Sarmiento said the company’s first step in the turnaround is its exit from corporate rehabilitation in September this year, 8 years ahead of the 2022 deadline.
“The stench of the rehabilitation will be out and it will provide confidence for our customers, clients, and business partners and even banks will be interested now, so it really opens all our doors. We are very excited, especially coming from 7 years of under receivership,” he said in a press briefing on Monday.
Vitarich recently sold its Marilao, Bulacan plant to low-cost housing developer 8990 Holdings Inc. for P610 million.
Proceeds of the sale will be used to pay off remaining debt, which stood at around P800 million last year, and to fund working capital.
Sarmiento said around P100 million from the sale will be used to fund operations, particularly to purchase raw materials.
The sale puts Vitarich's debt down to P300 million, which Sarmiento said “can be settled within the year.”
“We are still talking to our creditor Kormasinc on how we can settle that, it could be another round of debt-to-equity, there’s some receivables that we might assign to them, but what’s important is we’ll be out of rehab and we will be able to grow,” said Sarmiento.
Vitarich was placed under corporate rehabilitation in 2007 as it suffered losses from the Asian financial crisis in the late 90s and the avian flu outbreak in 2003.
Last year, the listed feed miller entered a debt-to-equity conversion strategy through creditor Kormasinc Inc., a special purpose company established to restore Vitarich to full financial health.
Kormasinc partnered with ADM Capital and Altus Capital Partners Inc. to invest in the rehabilitation of Vitarich.
The debt restructure allowed P2.38 billion of Vitarich’s P3.2 billion debt to be converted into equity.
Sarmiento said the sale of the Bulacan asset and Kormasinc’s investment boost Vitarich's efforts in expanding its sales and distribution projects.
"With these two, the company is gearing up for growth. We will be relaunching our core products and our food products starting with our Golden Dory line, which is scheduled to be launched on September,” he said, noting that positive results from recent developments will be felt by the company in the first quarter of 2015.
The Golden Dory is a locally bred and grown fish, and is poised to be an alternative to the imported Cream Dory, according to Sarmiento.
“Our first target for Golden Dory is to displace the imports, that’s our short term goal, instead of buying imported, we can enjoy locally grown dory which are grown by Filipino farmers,” he said.
He added that Vitarich is planning to launch more food products before the Christmas season.
Vitarich is currently revamping its feed products and is also preparing for a relaunch within the year.
Sarmiento also said that Vitarich is looking to partner with other processors as it focuses on its core business of feeds and food production.
“After getting out of rehabilitation, we are exploring—especially with the ASEAN integration coming next year—and looking for strategic partners in the region and globally that can strengthen our operations and will give us newer technology and operate better,” he said.
“During the rehabilitation, it’s very hard to attract good partners and I’m not going to be picky, if there are people interested, we are going to entertain everyone,” he added.
After the debt restructure, Kormasinc now owns 80 percent of Vitarich, with the Sarmiento family keeping a 5 percent stake.
The remaining 15 percent are publicly held shares.
Vitarich, which was established by brothers Feliciano, Lorenzo, and Pablo Sarmiento in 1950, is involved in the formulation, production, storage, and marketing of various animal and aqua feeds.