Court approves Vitarich rehab

Poultry integrator and feeds miller Vitarich Corp. was granted a debt reprieve by the Bulacan Regional Trial Court after its petition for corporate rehabilitation was found to be "sufficient in form and substance."

Vitarich chairman Rogelio Sarmiento said the company received an order from the court suspending all claims against Vitarich and appointing Eduardo Rondain as rehabilitation receiver. A hearing has been set on Nov. 8 at 8:30 in the morning.

In its petition, Vitarich said its assets, amounting to P3.31 billion as of end-August this year, are more than enough to settle all obligations to creditors.

Vitarich said it was forced to seek the assistance of this court for its rehabilitation because of adverse market conditions including a glut in the supply of poultry in the market, stiff competition and the removal of quantitative restrictions on the importation of poultry and poultry products.

According to Vitarich, its liquidity problems started in the mid-90s when it expanded massively in anticipation of a booming poultry and swine industry. Vitarich incurred a net loss of P50 million in the second quarter of this year after booking financing charges of P90.4 million, compared to a loss of P38.2 million in the same period last year.

In view of its petition for suspension of debt payments, the Philippine Stock Exchange suspended trading in shares of Vitarich. Shares of Vitarich closed at P0.22 as of its last trading date.

Weighed down by huge debts amounting to P3.2 billion, Vitarich sought a debt reprieve to allow it to map out a viable rehabilitation plan aimed at bringing the company back to profitability within 12 months.

The company’s proposed rehabilitation program calls for the restructuring of debts to creditors to allow the company to raise fresh capital for expansion. Vitarich in particular is seeking to stretch its current loan repayment agreement with creditors from 12 years to 15 years, and to be granted graduated interest rates.

Vitarich said the proposed rehabilitation program will also allow the company to utilize its operating revenues to further grow its feeds business instead of merely allocating its earnings to debt and interest payments under the restructuring agreement.

Sarmiento said his company has religiously paid its creditors some P2 billion in maturing obligations over the past two years under the restructuring program but the arrangement made it difficult for Vitarich to expand its business due to lack of capital.

"If we are allowed to utilize our earnings and temporarily suspend payments to creditors, Vitarich will be in a very good position to return to profitability in the next 12 months. Our business fundamentals are good, and we continue to enjoy the trust and support of our customers and suppliers, " Vitarich said.

Sarmiento said the rehabilitation will provide the company a much needed breathing space from its financial pressures and allow it to establish more responsive business conditions and formulate measures which are aimed towards regenerating its almost depleted operating capital.