MANILA - Monde Nissin Corp said Tuesday its board approved the change in use of its initial public offering (IPO) proceeds previously earmarked for capital expenditures to pay off loans.
The proceeds will instead be used to pay down the majority of the remaining term loans of P15.1 billion, Monde Nissin told the stock exchange.
Doing so will result in "interest expense savings of approximately P700 million assuming interest rates remain at current levels," the company said.
There is no change in the capital expenditure plans as stated in the IPO prospectus, which is set at P26.5 billion or 57.2 percent of the net proceeds.
"Given the current interest rate environment where returns on cash are negligible and where Monde Nissin has a large amount of cash due to our IPO, it was determined that the most prudent course of action for shareholders is to pay down debt, resulting in significant interest savings and a reduction in interest rate risk," Monde Nissin CEO Henry Soesanto said.
"We continue to have strong conviction of the long-term growth opportunities of our businesses and capital expenditure plans and growth strategy will remain unchanged. Funding will be provided by our strong operating cash flows supplemented with existing lines of credit if needed," he added.
Monde Nissin booked the country's biggest IPO, raising P48.6 billion from both domestic and international investors.
Monde Nissin is the maker of the popular Lucky Me! Instant Noodles and alternative meat brand Quorn.