Nenaco to raise P1-B for capex, vessels purchase

Metro Pacific Corp.-subsidiary Negros Navigation Co. (Nenaco) plans to raise around P1 billion by the second quarter either through a rights offering or private placement, proceeds of which will be used for capital expenditure and acquisition of new freighters.

With the company expected to post a P100-million profit in 2002 from a net loss of P1.36 billion in 2001, Nenaco believes it is now in a position to return to the capital market.

As this developed, Nenaco yesterday refuted claims in some papers (not The STAR) that the company was in arrears to various suppliers in excess of P160 million. It was also claimed that Nenaco has a pending litigation with Pilipinas Shell involving P100 million and that it is also in arrears for past drydocking services for P40 million.

Nenaco officials said the turnaround to profitability was due to several factors, including an aggressive cost-reduction scheme implemented by the company, efficient manpower reduction, and getting rid or selling non-core businesses.

Also a major contributor to the shipping company’s profits last year was the growth in its cargo and passenger businesses. In the case of cargo, it more than doubled in 2002 compared to the previous year, Nenaco vice-president David Nugent said.

Nenaco, which is 98 percent owned by Metro Pacific Corp. (MPC), also intends to move out of the roll on-roll off (RORO) vessel business which combines passengers and cargoes in one vessel and instead acquire in the future smaller vessels that are dedicated either to cargo only or to passengers only. Nugent explained that with the bigger vessels, such as those being used by WG&A, there are many instances when either the cargo or the passenger is underutilized.

Nenaco officials said the company plans to acquire up to five new cargo ships during the next two years.

Meanwhile, Pilipinas Shell, Petron and Flying V confirmed to Nenaco management yesterday that no litigation exists against the company and that their credit arrangements with Nenaco are standard and are nowhere near "cash only."

Nenaco officials also emphasized that the company does not have drydocking bills of P40 million, and is also not the subject of pending litigation from shipping firm Tsuneishi.

"Any claim that Nenaco’s official financial reporting is less than the highest standard in transparency is libelous. As was reported in Nenaco’s nine-month results announcement, it posted a net profit of P67 million, a significant reversal from losses posted during the same period last year. Management expects to announce a further improvement of this achievement in Nenaco’s 2002 results announcement scheduled for late February," the company said.

Nenaco likewise revealed that it currently has mutually satisfactory payment arrangements with its arrastre service provider North Star Arrastre as well as the rest of its suppliers and business partners in Manila and ports around the country. ——Mary Ann Reyes