SLAC to tap local debt market for P2-B fundraising in April

Published January 15, 2019, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

SL Agritech Corporation (SLAC), the biggest hybrid rice seeds producer in the Philippines, is planning to tap the debt market anew some time in April to raise as much as P2 billion.

SLAC Chief Executive Officer Henry Lim Bon Liong said that for now, he still prefers to issue short-term commercial papers (STCPs) than do other mode of fundraising activities such as an initial public offering (IPO).

“We might raise P2 billion in one STCP issuance some time in April,” Lim said in an interview with reporters.

STCPs are unsecured debt instrument issued by a company normally to finance its receivables, inventories, and short-term liabilities.

The funds to be raised will be largely used by SLAC to finish the construction of a new rice mill in Tarlac. If there is an excess, the firm will use them to start the construction of facilities in India and Myanmar.

Lim said the construction of the rice mill in Tarlac already started and is targeted for completion by the third quarter of this year.

In March last year, SLAC also raised P2 billion through an STCP issuance to refinance its existing debt and to finance working capital requirements.

It was in 2016 when SLAC first issued P1 billion worth of STCP, which was followed by another issuance in December that year where it raised P1.5 billion.

SLAC is the only company that locally produces its own variants of hybrid seeds.

Last week, Lim said SLAC may be forced to bring down the cost of its products, which are currently priced at a premium, once more imported supply starts flooding the local market.

Right now, special rice like SLAC’s Doña Maria is not covered by the Suggested Retail Price (SRP) that the government currently imposes on the main staple.

Still, Lim said he doesn’t want to dismiss the possibility of having to reduce the price for his products once more cheaper imported rice starts coming into the country.

Doña Maria’s Jasponica White Rice is currently available in almost all the country’s local supermarket and is being sold for more than P100 per kilo.

Once the Rice Tariffication Bill, which would formally lift the quantitative restrictions (QR) on rice imports, is passed, the price of rice in the country could go down to as low as P20 per kilo depending on the amount of imported rice that will be shipped here.