Victorias Milling on road to recovery

The Securities and Exchange Commission said that cash-strapped sugar milling firm Victorias Milling Co. Inc. may be well on its way to full recovery following the approval of its increase in capital which paved the way for the conversion of its debts into equity.

SEC Chairman Lilia R. Bautista said the Commission expects VMC management and creditors to resolve all issues surrounding the sugar miller’s rehabilitation by end-December.

VMC raised its capital to P2.6 billion. The capital hike forms part of the sugar milling company’s wide-ranging rehabilitation plan.

As a result of the conversion of their loans into equity, VMC’s 30 creditors, composed of banks and financial institutions, will own 69.5 percent of the debt-saddled firm’s total capital stock.

VMC chief operating officer Arthur Aguilar said the increase in capitalization will further enhance the rehabilitation of the company’s milling and refining operations.

Aguilar said creditor-banks were now formalizing their respective acquisition of VMC shares. They are entitled to seven of the 11 seats in the new board.

The election of the new board of directors will signal the start of the final implementation of the 15-year rehabilitation plan for VMC. The new board would perform the functions of the VMC management committee, which was appointed by the SEC to oversee the company’s rehabilitation.

VMC reported earlier that it had completed its work force reduction program which also formed part of its rehabilitation program.

The company was able to reduce its manpower from 2,446 to 1,641. At its peak, VMC had almost 4,000 workers, making it the biggest sugar milling company in the Philippines.

The retrenchment program cost VMC about P250 million from internally sourced funds.

The alternative rehabilitation plan prepared by the VMC management committee, was approved by the SEC in December last year. It calls for the infusion of P300 million in fresh capital into the sugar firm.

This was the second time that the SEC approved a rehabilitation plan for VMC which sought reprieve on the payment of its over P5 billion in debts in June 1997. The management committee overseeing the operations of Victorias submitted to the SEC a new rehabilitation plan after a failed bidding in March last year.

The bidding formed part of the original rehabilitation plan filed by the mancom with the SEC in June 1997. The debt level of Victorias has grown to P6.55 billion from P5.18 billion due to accumulation of unpaid interest which should have been paid from the firm’s cash flow if the rehabilitation plan was implemented earlier.