Lucio Tan group again raises holdings in Victorias

MANILA, Philippines – Lucio Tan’s LT Group Inc. raised again its stake in Victorias Milling Corporation Inc. (VMC), this time acquiring shares held by the state-run Development Bank of the Philippines (DBP).

In a disclosure to the Philippine Stock Exchange Friday, August 8, LT Group said it purchased some 63.156 million common shares in VMC owned by the DBP at P5.32 per share.

“The company’s aggregate interest in VMC, including the convertible notes, amounts to 716,50.3347 equivalent to 23.5% of the total issued and outstanding shares,” the LT Group said.

In a regulatory filing in April, LTG said it raised its interest in VMC to 14.8% from 7.4%. It did not disclose the value of the transaction.

LTG is engaged in the manufacture of tobacco products and distilled spirits, as well as property development. Its subsidiaries include Tanduay Distillers Inc., Asia Brewery Inc., Philip Morris Philippines Manufacturing Inc., and Eton Properties Philippines Inc.

The largest sugar milling firm in the country, VMC manufactures integrated raw and refined sugar. It has facilities in Victorias City, Negros Occidental. Its subsidiaries are engaged in fish canning, real estate, sugar sacks manufacturing, and golf course and restaurant operations. VMC is also the main sugar supplier of Tanduay.

The company has been paring down its debt under a 15-year rehabilitation program to strengthen its balance sheet. It is upgrading its production facilities in preparation for heightened competition when sugar tariffs across the Association of Southeast Asian Nations are reduced to between 5% and zero by 2015.

Investing in the sugar business

The increase in LTG’s VMC stake was seen as a defensive move amid reports that the Manuel V. Pangilinan-led First Pacific group is interested in buying into VMC.

Metro Pacific Holdings Inc, the controlling shareholder of Metro Pacific Investments Corp (MPIC), recently hiked its holdings in the sugar miller to 7.485%.

The First Pacific group also owns a third of Roxas Holdings Inc., the Philippines’ most diversified sugar company. The group is looking into investing in Philippine agriculture to supply the raw material needs of unit PT Indofood Sukses Makmur Tbk, one of the biggest food companies in Indonesia.

Meanwhile, in July, the group of businessmen Martin Lorenzo and Fernando Cojuangco said it was buying controlling interest in sugar milling firm Central Azucarera de Tarlac Inc (CAT) for P1.80 billion ($40.68 million*).

Tarlac Development Corporation of the Cojuangco clan – the maternal family of President Aquino – acquired sugar mill Central Azucarera de Tarlac from its original Spanish owners in 1957 using money from the government.

The government gave the family control over the 6,000-plus hectare estate on the condition that the lands would be distributed to farmers after 10 years.

But until the April 24, 2012, Supreme Court decision, Hacienda Luisita had evaded distribution.- Rappler.com

*($1 = P44.25)