IFC agrees to restructure $14.5-M Mariwasa loan

The International Finance Corp. (IFC), the investment arm of the World Bank, has agreed to restructure its multi-million dollar loan to Mariwasa Manufacturing, the largest ceramic tile maker in the Philippines.

IFC invested $14.5 million in Mariwasa in 1999. The company defaulted in 2003 amid increased competition, slowing demand, spiraling electricity costs, and loss of market share to imported ceramic tiles.

The debt restructuring deal involves the entry of a new shareholder as well as management structure overhaul. IFC said the agreement likewise provides for focused marketing strategies.

“The Philippine tile industry is still domestically oriented. With cheaper imports and better availability of alternatives to ceramic tiles, there is a need for more strategic choices in terms of management and markets,” IFC Acting Country Manager Jesse Ang said.

“With IFC’s renewed support, we hope to enhance Mariwasa’s efficiency and its ability to find niche markets. This will also contribute to the sector’s competitiveness,” he added.

In a statement, IFC said that as part of its commitment to help boost the local tile industry, it has led a group of lenders in negotiations with Mariwasa.

Surasak Kraiwitchaicharoen, president of Mariwasa Siam Ceramics, thanked IFC for its leadership in the negotiations with various creditors.

Kraiwitchaicharoen pledged to focus more energy on improving the company’s profitability and financial stability by growing the business in the domestic market, as well as overseas.

He said Mariwasa will try to open new markets specifically Guam, Indonesia, Japan, Saipan, Singapore, South Africa, and Thailand.

The company borrowed money in 1999 to restructure Mariwasa’s finances and operations. In the project summary submitted by Mariwasa to IFC at the time the loan was made, the tile maker said it will use the borrowed capital for the injection of a significant amount of fresh equity, payment of debt, major reduction of inventory levels by the company and debottlenecking of production facilities in line with market recovery.

Mariwasa is controlled by the Co Seteng family and its associates who owns 51 percent of the company, Thailand’s Siam Cement Group has 46 percent while the remaining is divided among small shareholders.

It was founded in 1966 with the main plant in Pasig, Manila. It operates another four small wholly-owned subsidiaries in Manila which specialize in wall tiles, polished tiles, and custom-design tile orders. Mariwasa established a modern, wholly-owned subsidiary called Mariwasa Siam Ceramics (MSC) in a Batangas, Luzon industrial zone in 1997.