D&L Industries eyes to raise P5B thru maiden bond offering

Listed specialty chemicals manufacturer D&L Industries Inc. is planning to raise around P5 billion through the issuance of fixed-rate bonds, its maiden bond offering set to take place this year.

In a disclosure to the Philippine Stock Exchange on Tuesday, D&L said its board of directors approved the company’s plan to offer and sell to the public peso-denominated fixed-rate bonds in the aggregate amount of P3 billion win an over-subscription option of up to P2 billion.

The bonds will have a tenure of three to five years.

Final details of the issuance, including interest rates, will be finalized together with the company’s underwriters, it said.

The bond offering is subject to the approval and requirements of the Securities and Exchange Commission and the Philippine Dealing and Exchange Corp.

“The proceeds from the bond issuance will primarily be used to finance the company’s expansion plans in Batangas which involves a total estimated capex of P8 billion and the corresponding working capital requirements,” D&L said.

“Construction started in late 2018 and completion is expected by the end of the year. Remaining capex to be deployed for the project is about P4 billion,” it said.

Once completed, D&L said 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.

The plant 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,” it said.

“For instance, while the company primarily sells raw materials to customers in bulk, the new plants will allow it to ‘pack at source’,” it added.

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 enable the company to move a step closer to its customers by providing customized solutions and simplifying their supply chain, which is of high importance given global logistical challenges and concerns.

“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 CEO Alvin Lao. — RSJ, GMA News