The restructuring will involve P1.005 billion in convertible notes plus the accrued interest of P150 million as of Sept. 30, 2000. Based on the agreement, P655 million (inclusive of the P150-million interest) will be converted into a seven-year term loan with interest rate computed on a graduated basis, while the remaining P500 million will be converted into a revolving credit line with interest based on the 91-day Treasury Bill.
The 10-year convertible notes form part of Vitarich’s P3.176-billion total debt load, which includes another P1.668 billion in seven-year term loans and P503 million in revolving credit line.
These notes are convertible to common shares of Vitarich at P1.50 per share after the fourth year from issue date, or can be redeemed at face value plus a premium of 14 percent per annum from value date.
Vitarich said its improving financial condition, despite a sluggish business environment, enabled it to offer the accelerated payment plan, which the creditor banks approved effective Oct. 1, 2000.
The company derives most of its revenues from poultry. As of end-2000, contributions to gross sales by foods was 63 percent; fees, 30 percent; and farms, seven percent.
In 2000, Vitarich sales reached P5.86 billion, a 14 percent growth from the previous year. Its net income, however, went down from P249 million to P132 million due to the continued losses of its subsidiary Philippine Favorite Chicken, the operator of the Texas Chicken store chain.
Vitarich, like most of in the poultry business, suffered from the onslaught of the chicken parts imports in early 2000 and as it was recovering in the second half, prices of its imported raw materials – which account for 60 percent of total cost – increased due to the peso devaluation.