URC agrees to buy milling, refining assets of Central Azucarera Don Pedro in Batangas

August 23, 2018

Universal Robina Corporation (URC) has reached an agreement with Roxas Holdings, Inc. (RHI) to acquire the milling and refining assets of its wholly-owned subsidiary Central Azucarera Don Pedro, Inc. (CADPI) and land owned by RHI, on which the milling and refining assets are situated in Batangas.

This was announced by URC in a disclosure to the Philippine Stock Exchange on Thursday. The amount has not been disclosed.

Under the terms of the sale transaction, URC will acquire all buildings, improvements, machineries and equipment, laboratory equipment, spare parts  and transportation equipment, as well as the land on which the assets of  Roxas Holdings and Central Azucarera de Don Pedro are located, including other parcels of land necessary for the operations of the refinery and milling plant located at Brgy. Lumbangan, Nasugbu, Batangas.

The transaction is under review by the Philippine Competition Commission (PCC).

A statement by the PCC said it is trying to find out if there will be  substantial lessening of competition in Batangas, Laguna, Cavite and Quezon  and the "increased likelihood that competitors in such markets will coordinate their behavior or strengthen existing coordination in a manner that harms competition."

In a separate disclosure, Roxas Holdings Executive Vice President and Chief Financial Officer Celso. Dimarucut said the sale will significantly reduce the firm’s leverage as proceeds will be used to pare down debt.

“We will prepay all long-term debt and reduce short-term debt to levels sufficient for our working capital needs,” he said.  “Our strengthened balance sheet will enable us to be more agile in responding to changing market conditions and will give us the flexibility to pursue opportunities to grow at a much faster pace.”

“We believe that URC’s acquisition of the milling and refining assets of CADPI will create synergies in the sugar industry in Batangas that will benefit all stakeholders – sugarcane farmers, sugarcane workers and the communities,” said URC Chairman Lance Gokongwei.

Total raw sugar production in Batangas for crop year 2017-2018 is around 2,600,000 million 50-kg bags, or roughly 6 percent of total annual national sugar production.

URC, through its Sugar and Renewables Division, operates six sugar cane mills nationwide, producing raw sugar, refined sugar and molasses. DMS