LT Group Inc., the listed holding company of beer and tobacco tycoon Lucio Tan, cancelled plans to sell its Negros Occidental-based distillery to Victorias Milling Co. Inc. for P2.21 billion.
LT Group and VMC said in separate disclosures to the stock exchange they agreed to drop the sale and purchase agreement because of the recent global and local developments, “unusual market developments” in the sugar industry and the “steady pressure against the peso”.
“In view of the recent global as well as local economic and political events affecting the relevant industries, both parties have mutually agreed not to proceed with the transaction,” LT Group said.
“The unusual market developments in the sugar industry, not to mention the steady pressure against the Philippine peso in an industry that requires heavy capital expenditures constrained Victorias Milling Company Inc. to take a more prudent position on the transaction consistent with its status as a company under corporate rehabilitation,” it said.
LT Group said in September unit Tanduary Distillers Inc. and two other minority shareholders signed a share purchase agreement with VMC for the sale of their entire interest in Asian Alcohol Corp.
ACC is the second biggest distillery in the Philippines located in Negros Occidental. It employs distillation process that uses molasses, yeast, water and other ingredients. It has a 10-hectare plant in Negros Occidental, considered the sugar industry capital.
The plant also houses a modern wastewater treatment plant which converts distillery waste into biogas energy for power requirements. It has a daily rated capacity of 210,000 liters of quality ethyl alcohol.
The acquisition was supposed to provide VMC with long-term value as this would increase the profitability and cash flows of the group and raise the group’s market share in the ethanol industry.
LT Group is primarily engaged in banking and financial services, real estate, liquor and beverage business. It also holds a 30-percent interest in VMC.
LT Group reported a 105-percent growth in attributable net income to P20.41 billion in the first three quarters from P9.95 billion a year ago, as revenues rose 6 percent to P71.34 billion from P66.94-billion.
Tanduay Distillers Inc. contributed P855 million or 4 percent of the total, while Asia Brewery Inc. accounted for P428 million or 2 percent. The group said liquor volume increased 10 percent, while bioethanol’s volume went up 9 percent.