MANILA, Philippines — Conglomerate JG Summit Holdings Inc. is injecting fresh capital to its petrochemicals unit to pay off maturing obligations.
JG Summit said its board approved the infusion of additional capital of up to P17.1 billion into its wholly owned subsidiary JG Summit Olefins Corp. (JGSOC).
JG Summit will subscribe to additional shares of JGSOC, which will be partially issued out of an increase in capital stock and partially through existing unissued shares.
On the increase in authorized capital, JG Summit said that 25 percent would be subscribed, out of which more than 25 percent will be paid on or before Dec. 26, 2024.
Payment on the subscription to the unissued shares, meanwhile, will be made on or before Dec. 26, 2024.
“This infusion is primarily intended to pay off JGSOC maturing obligations,” JG Summit said in a stock exchange filing.
A wholly owned subsidiary of JG Summit, JGSOC is engaged in acquiring, designing, constructing, operating and maintaining a naphtha cracker plant and related facilities for the production of products such as polymer grade ethylene, polymer grade propylene, pyrolysis gasoline, mixed C4, pyrolysis fuel oil and other products and their by-products.
JGSOCs nine-month revenues surged by 53 percent year-on-year from a low base in 2023, boosted by higher plant run rates along with the full adoption of the pricing tool from its business-wide transformation program.
Despite the business’ newer downstream products offering some cushion, industry-wide polymer spreads dropped to historic lows and weighed on JGSOC’s EBITDA, closing the period with a P3.8 billion loss.
The company has been undertaking transformation initiatives which continue to support the business amidst the global oversupply.
The initiatives include using targeted account management to serve key customers, being more selective with its export markets, fortifying governance over its pricing process and launching best-in-class reliability programs.