JG Summit okays plan for petrochem unit

JG Summit Holdings Corp. has approved the quasi-reorganization plan of its 80-percent subsidiary JG Summit Petrochemical Corp. (JGSPC), a company official told the Philippine Stock Exchange.

JG Summit corporate secretary Emmanuel Rojas said management has started the implementation of the quasi-reorganization, a vital component of which is the debt-to-equity conversion for a $100-million loan extended to JGSPC by its parent firm.

In July last year, the two parties agreed to the debt-to-equity swap to help the company in reducing its debt exposure and at the same time strengthen its balance sheet.Under the plan, JG Summit’s partner in JGSPC, Japan’s Marubeni Corp., will assume a loan from the Japan Bank for International Cooperation (JBIC) which it has guaranteed for JGSPC, and convert it to equity.

The Japanese trading conglomerate has the remaining 20-percent stake in JGSPC.

Since commencing operations in August 1998, JGSPC has not yet experienced profitability although it has since then led the local petrochemical industry in the production and supply of polyethylene (PE) and polypropylene (PP). Its $300-million plant in Batangas has the capacity to produce 180,000 tons of PP and 175,000 tons of PE annually, cornering nearly 45 percent of the total domestic market.