Sarmientos to retain control of Vitarich
MANILA -- The Sarmiento family will retain management control of Vitarich Corp., a pioneer in poultry and feeds manufacturing, despite conversion of its debt into equity to white knight Kormasinc Inc.
Ricardo Manuel Sarmiento, Vitarich executive vice president, said the debt-to-equity deal significantly reduced the company’s liabilities to about P800 million from the previous P3.25 billion.
“There’s no talk of change in management. Kormansinc is supporting Vitarich. It is in their interest that Vitarich succeeds. They believe in the Sarmiento family to continue its management at this time,” Sarmiento said in a press briefing.
Vitarich is currently engaged in the formulation, production, storage and marketing of various animal and aqua feeds in mash, pellet, crumble and extruded forms. It has been under corporate rehabilitation since 2007 as a result of difficulties in paying over P3 billion worth of liabilities.
Kormasinc is a special purpose vehicle created to absorb all the debts of Vitarich. According to its filing at the Securities and Exchange Commission, the company was established in April 2008 and is currently headed by Pedro Gonzalo Sereno.
Sarmiento failed to disclose the next steps the company will take following the debt-conversion measure but said Vitarich is looking at selling the assets that the company’s founders.
“We have the hatchery, some real estate and a long list of assets that we don’t really need at the moment,” he said.
Vitarich sold its non-core assets, such as investment properties, plants and equipment, in 2010 to settle a portion of its obligations.
Sarmiento said he expects the company to fully pay the remaining P800 million in debts within one to two years, although exiting from the court-approved rehabilitation may take longer.
“But the overhanging uncertainty of foreclosure is now gone and we are ready to move forward and grow the business. We’re taking our first step forward in regaining our market leadership,” he added.
Kormasinc effectively now owns more than 79 percent of Vitarich and the rest by the existing shareholders, including the Sarmiento family.
Vitarich was incorporated and organized in 1962 by brothers Feliciano, Lorenzo and Pablo Sarmiento, through its forerunner Philippine American Milling Co. Inc. Vitarich is one of the oldest feed brands in the country.
The company entered into its 15-year corporate rehabilitation in 2007. As of end-2012, it has completed payments of P263.7 million, while the bulk of its assets have been sold to creditor banks and SPAVs.