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News 1399 views last update:14 Jan 2016

Vitarich looks into white knight investment

One of the Philippines largest integrators’, Vitarich, disclosure about a possible white knight investing in the company gives credence to stock market rumours that a Cebu province based firm with a flour milling business is interested in buying into the Sarmiento-owned poultry and feeds producer.

Vitarich has admitted that it is in talks with a white knight (friendly investor), who is either an existing creditor of the company or a non-lender now. “As of date, the corporation is still negotiating with them and at present, there is no firm commitment yet from them,” Vitarich said in a disclosure about the prospective rescuer.

Vitarich’s operations fit the operations of the Cebu-based food company, which has interests in flour and feed milling, poultry and hog farms.

“An investment or takeover of Vitarich will give the Cebu company another feed mill and access to a sales network that extend throughout Luzon,” an industry executive said. “The investment also gives the Cebu-based company a feed brand that performs well in the market.”

Vitarich’s brand of dressed chicken, day-old chicks and animal and aqua feeds have made their imprints across Luzon. Its poultry and feed products are expected to boost the Cebu company’s feed milling capability and make the latter a nationwide concern.

Financial problems
Getting the Cebu-based company as partner, meanwhile, will give Vitarich leeway to address its financial problems.

The Cebu firm’s holding company has interests in banking that Vitarich could exploit in dealing with creditor-banks.

Vitarich plans to issue over 3 billion common shares to accommodate a possible conversion of debt into equity, or sell part of it to an incoming investor. An investment either in the form of cash or equity conversion will improve the company’s operating capital after existing loans are retired.

Vitarich in 2006 filed for corporate rehabilitation after experiencing difficulties in paying bank loans and other liabilities.

An oversupply of poultry in the market, stiff competition and the removal of quantitative restrictions on the importation of poultry and poultry products doomed Vitarich. The outbreak of the avian flu in 2006 exacerbated its liquidity problems.


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