Vitarich receives ‘feelers’ from 2 groups

Vitarich Corp. said over the weekend that it has received feelers from two entities, one local and one foreign, to invest in the debt-saddled poultry integrator and feeds miller, according to a top company official.

Vitarich chairman Rogelio Sarmiento said the foreign group which is among the top 10 feed millers in the world, is eyeing management control of the cash-strapped poultry firm. He declined to identify the prospective foreign investor but said this company has an existing trading contract in the Philippines.

The local group, on the other hand, has proposed to assume the P3.2-billion debt of Vitarich in exchange for equity.

The entry of a white knight forms part of the company’s proposed rehabilitation program submitted to the Bulacan Regional Trial Court, aimed at turning around financial operations within 12 months.

The rehabilitation plan also calls for the restructuring of debts to allow the company to raise fresh capital for expansion. Vitarich is seeking to stretch its current loan repayment agreement with creditors from 12 years to 15 years,with graduated interest rates.

Vitarich said the plan will allow it 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 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.

He stressed that the company has religiously paid its creditors some P2 billion in maturing obligations over the past two years under a restructuring program, but this arrangement has made it difficult for Vitarich to expand its business due to lack of capital.

Vitarich secured a debt reprieve after its petition for corporate rehabilitation was found to be "sufficient in form and substance" by the Bulacan RTC. A stay order was issued by the court, stopping all payments of debts and other claims instituted against the company.

The court also appointed Eduardo Rondarin as rehabilitation receiver with the petition set to be heard on Nov. 8 at 8:30 a.m.

Vitarich said its assets, amounting to P3.31 billion as of end-August this year, are more than enough to settle its P3.2-billion debts.

Vitarich said it was forced to seek debt relief 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.

Vitarich inccurred 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.