Monde Nissin diverts IPO proceeds from capex to debt payments

MANILA, Philippines — Food giant Monde Nissin Corp. announced Tuesday that funds raised during its historic maiden share sale and were originally earmarked for capital expenditure will instead go to paying old debts.

The company, which raked in P48.6 billion earlier this year during the largest initial public offering in Philippine history, announced the changes to the use of IPO proceeds in a disclosure to the stock exchange on Tuesday.

Monde Nissin said funds raised during its IPO will now be used to settle maturing loans amounting to P15.6 billion, in hopes of generating approximately P700 million in interest savings assuming that borrowing costs remain at current level.

In turn, capex will now be funded with cash from operations and, if necessary, loans that were recently secured at lower rates.

“Given the current interest rate environment where returns on cash are negligible and where Monde Nissin has a large amount of cash due to our IPO, it was determined that the most prudent course of action for shareholders is to pay down debt,” Henry Soesanto, company chief executive, said.

“We continue to have strong conviction of the long-term growth opportunities of our businesses and capital expenditure plans and growth strategy will remain unchanged,” Soesanto added.

Despite the adjustments, Monde Nissin — not related to Japan's Nissin Foods Group — said its capex through 2023 will remain unchanged at P26.5 billion.

Broken down, the maker of household staples such as Lucky Me! Instant Noodles and Nissin Wafers earmarked capex amounting to P8 billion this year, P9 billion for 2022, and P10 billion for 2023.

On Tuesday, shares in Monde Nissin inched up 0.83% to close at P16.92 apiece.