SL Agritech to raise via comm’l papers

SL Agritech Corporation (SLAC), a leading producer of hybrid rice seeds and premium rice in the Philippines, is planning to raise up to 1 billion from a proposed commercial paper issuance.

The firm has received an issuer rating of PRS Aa (corp.) from Philippine Rating Services Corporation (PhilRatings) for the planned float.

In arriving at the rating, PhilRatings considered SLAC’s good market position, though with a relatively short track record in terms of operations; its strong core revenue generation, and the positive prospects for the hybrid rice industry.

An issuer rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations within one year.

The focus is on financial strength and stability under normal and stressed conditions to be able to meet existing and prospective financial obligations.

A company rated PRS Aa (corp.) differs from the highest-rated corporates only to a small degree, and has a strong capacity to meet its financial commitments relative to that of other Philippine corporates. SLAC’s operations are divided into two business segments: the production of hybrid rice seeds and the production of premium rice. SL-8H, its flagship rice seed product, is available to farmers through the Department of Agriculture (DA) Regional Office, the Municipal Agricultural Office (MAO), local distributors and dealers, financiers/ big land owners, and cooperatives/irrigators’ associations.

SLAC’s premium rice products are currently offered through retail stores, wholesalers and dealers nationwide. SLAC also supplies premium rice products to hotels, restaurants and cafes.

PhilRatings notes, however, SLAC’s relatively short track record in terms of operations and during a period when the Philippine economy has been doing fairly well. SLAC has yet to be subjected to severe economic downturns.

Except in 2011, when the company booked a substantial increase in sales returns (up 192.8 percent), SLAC exhibited strong revenue generation from core operations for the period 2010-2014. Going forward, PhilRatings said SLAC’s revenues will remain robust. The expected growth will come from the strong performance of both segments.

Except in 2013 when demand registered a slight decline, rice consumption has been increasing at a faster pace than rice supply. This exerts pressure on the Philippines to be able to increase national rice production and attain rice self-sufficiency for its expanding population. (JAL)