Victorias Milling modifies rehab plan

Victorias Milling Co. (VMC), which is struggling to fasttrack its comeback in the sugar milling industry, has recently modified its alternative rehabilitation plan submitted to the Securities and Exchange Commission (SEC) earlier this year.

The proposed changes in the rehabilitation program are expected to iron out the differences between the plan mapped out by VMC’s management committee and that of the company’s top management outlining the viability of the sugar miller’s recovery.

Buckling under the pressure of having to avoid a SEC-imposed liquidation order, the sugar milling company is striving to regain its foothold in the industry, with a cash infusion amounting to P400 million.

The cash infusion has been seen to augment the company’s cash flow which is projected to absorb expenses related to the start-up of its operational recovery, the acquisition of new equipment, and the compensation of retrenched workers.

"The loan of P400 million is the amount proposed under the VMC management version of the alternative rehabilitation plan," said Romeo Hermoso, VMC’s chief financial officer, adding that the loan would not be a problem to the banks.

The alternative rehabilitation plan, Hermoso said, also calls for the conversion of debts into convertible notes amounting to P400 million, a chunk of which should be made by creditors.

"The requirement for actual conversion will be based on the situation under which the operating cash flow would have a shortfall as to permit VMC to pay all creditors of the maturing debt servicing (principal and interest) amortization," Hermoso said.

"The clean creditors, at the implementation of the rehabilitation plan," he added, "should undertake a firm commitment to ensure the viability and financial feasibility of VMC’s rehabilitation."

Hermoso said that the debt conversion into convertible notes will take effect within the three-year rehabilitation period of the company after which any debt conversion into convertible notes will be meant to assure the "convertible note holders of their option to convert to equity or to wait for the redemption of the convertible notes."