RFM mulls P500-million bond offer this year

MANILA, Philippines - Food and beverage conglomerate RFM Corp. is studying the possibility of a P500-million bond offering late this year to raise funds for capital expenditures.

This year is P300-million lower than the company’s capex budget of P800 million last year which was spent for the construction of its pasta plant – P400 million – and P200 million each for its milk and juice plants.

RFM executive vice president and chief operating officer Felicisimo Nacino Jr. said this year’s budget will be used to buy additional equipment and for advertising for its key brands.

Meanwhile, RFM chief executive officer and president Jose Ma. Concepcion III reported during the company’s stockholders’ meeting a 23 percent sales growth in the first quarter of this year with its Selecta ice cream brand cornering 54 percent of the market and gaining the No. 1 spot, and its pasta brand, Fiesta, likewise, gaining leadership in that market segment.

Because of its favorable first quarter performance, Concepcion expressed confidence that the double digit growth would be maintained for the rest of the year and accelerating further in 2010 and 2011.

Speaking to reporters following the meeting, Concepcion predicted an even better year next year for RFM due to election spending.

After spinning off its real estate subsidiary, Concepcion said RFM is better focused to expand its various food markets that include flour, ice cream, beverages and meat products.

This year, RFM is allotting a substantial chunk of its working capital this year for advertising to build its various brands and thus gain more market, he added.

Funding for the P500 million capex this year would primarily come from internally generated funds plus bank borrowings, although the company is studying the possibility of a bond offering, Nacino said.