TOKYO, Japan - Metro Pacific Investments Corporation (MPIC) intends to close the deal to acquire a strategic interest in coconut products exporter Axelum Resources Corporation before the end of this year despite the need to do further due diligence on the company.
In a press briefing, MPIC Chief Finance, Risk and Sustainability Officer Chaye A. Cabal-Revilla said they have further extended the closing of the transaction so they can “dig deeper” into the assumptions or forecasts of Axelum for 2023 and 2024.
She explained that while the latest deadline for the closing of the deal was last Oct. 31, MPIC and Axelum had mutually agreed to extend the due diligence period “because the expected outcome in terms of performance in our earlier due diligence has not happened.”
“(This) week we will have a meeting with them and then we will see their forecasts for 2024,” said Cabal-Revilla noting that, “through the unfolding of the results in 2023, they have been very far from their (projected) numbers.”
She said Axelum has been having difficulty in recovering from the weak sales in the US which is the major export market for its coconut products.
Meanwhile, Cabal-Revilla said the valuation for the acquisition of a significant stake in Axelum is also in discussion and have yet to be finalized “because they have not met their targets and they are going to re-forecast their numbers.”
Last February, MPIC said it was expanding its agriculture business by acquiring a 34.76 percent stake in listed coconut products exporter Axelum Resources Corporation for P5.32 billion.
Axelum said it will enter into a strategic partnership with the conglomerate through the planned investment by MPIC’s wholly-owned subsidiary Metro Pacific Agro Ventures Inc. (MPAV).
In a disclosure to the Philippine Stock Exchange (PSE), Axelum reported a core net loss of P118.12 million for the first nine months of 2023 from the net income of P717.28 million earned in the same period last year.
Core net loss is excluding a one-time loss on inventory write-down amounting to P309.88 million which reflects management’s current estimate of the unfavorable market price movement on finished goods inventory.
Revenues declined to P4.28 billion fro P4.79 billion in the comparative period of 2022.
“Our short-term focus is to finish the year on a high note, while setting ourselves up to be in the strongest position for a major turnaround in 2024,” said Axelum President and COO Henry J. Raperoga.
He noted that, “We are already seeing demand uptick in the United States, combined with other positive market indicators, which should further our momentum heading into the holiday peak season.”