Victorias Milling buys LTG alcohol unit for P2.2 billion

MANILA, Philippines — Sugar miller Victorias Milling Co. Inc. (VMC) acquired Asian Alcohol Corp. (AAC) from the Lucio Tan (LT) Group and partners for P2.21 billion.

In a disclosure to the Philippine Stock Exchange (PSE) , VMC said it signed a sale and purchase agreement with Tanduay Distillers Inc., Prior Holdings Inc., and Castelbridge Investment Corp. to acquire 100 percent of the outstanding capital stock of AAC.

Under the deal, the shareholders of the manufacturer of rectified and denatured alcohol sold 738.33 million common shares to VMC for a total price of P2.21 billion, subject to adjustments based on the financial audit report to be issued by SGV & Co.

The transaction, which will make AAC a wholly owned subsidiary of VMC, is expected to close before the end of the year.

The acquisition is seen to support VMC’s thrust to become a fully integrated sugar business by diversifying into ethanol and power.

VMC is primarily engaged in integrated raw and refined sugar manufacturing with facilities in Negros Occidental.

It also has businesses in food processing, leisure, real estate, and energy generation.

Since 2018, VMC has upgraded and expanded its existing distillery facility in Manapla, Negros Occidental, to produce ethanol, which now has a production capacity of 36 million liters.

“Acquiring a similar business will provide cost synergy in terms of shared manpower, information technology and supply chain. The company also has access to expertise that can streamline the processes to optimize production, increase recovery and efficiency of the plants,” VMC said.

Moreover, VMC said the company – being under corporate rehabilitation – is mandated to continuously create measures to attain sustainable financial stability.

“The horizontal integration will not only improve the profitability and cash flows of the group, it will also increase the group’s market share in the ethanol industry, and in extension its contribution to the energy security of the country with the least negative impact to the environment,” it added.

In 1997, VMC filed a petition for rehabilitation with the Securities and Exchange (SEC) because of financial difficulties.

The trading of VMC shares in the PSE was suspended, but on May 21, 2012, the SEC and the PSE lifted the suspension order.

As part of VMC’s debt restructuring, the restructured trade liabilities were also fully paid in 2013.

In its quarterly report, VMC said it is still under rehabilitation as May 31. A rehabilitation receiver continues to monitor, together with the elected board of directors and committees, the successful completion of the rehabilitation of VMC.

For the nine months ending May 31, the company reported a 16 percent rise in net income to P743.57 million from a year ago level of P636.83 million.

Its consolidated revenues increased by 11 percent to P7.02 billion from P6.31 billion on account of higher revenues from ethanol, refined sugar, milling services and tolling fees.