Food ingredients and plastics manufacturer D&L Industries Inc. said Wednesday it filed with the Securities and Exchange Commission a registration statement for a planned maiden bond offering worth up to P5 billion.
D&L said it would offer P3 billion worth of peso-denominated fixed-rate bonds, with an oversubscription option for another P2 billion. The bonds will have tenors of three and five years.
The company hired SB Capital as the sole issue manager, underwriter and book runner for the offering.
It said the net proceeds would be used to partially to fund the Batangas expansion plant, to repay bridge loans and for general corporate purposes.
“With interest rates still remaining low, we believe it’s an opportune time to tap the debt market. Our maiden bond offering will be a useful financial exercise for the company and will allow flexibility for future opportunities we can potentially take advantage of,” said D&L president and chief executive Alvin Lao.
Once completed, the new plant will be instrumental to the company’s future growth, in line with plans to develop more high value-added coconut-based products and penetrate new international markets.
It will mainly cater to D&L’s growing export business in the food and oleochemicals segment. It will add the capability to manufacture downstream packaging, thus allowing the company to capture a bigger part of the production chain.
The company primarily sells raw materials to customers in bulk, but the new plants will allow it to “pack at source”. This means that D&L will have the ability to process the raw materials and package them closer to finished consumer-facing products.
This will also enable D&L to move a step closer to customers by providing customized solutions and simplifying the supply chain, which is of high importance given the global logistical challenges and concerns.
The company said that as of end-December 2020, it remained lightly-geared with net gearing at 17 percent and interest cover at 18 times. Average cost of debts, which were all short-term, stood at 3.53 percent.
Post bond offering, the company estimates its net gearing and interest cover would reach 42 percent and 11 times, respectively.