Tanduay seeks to borrow up to P10 billion

By IRIS CECILIA C. GONZALES, BusinessWorld Senior Reporter Lucio Tan-led Tanduay Distillers, Inc., one of the country’s largest liquor companies, has tapped Henry Sy-led Banco de Oro Universal bank and possibly three other banks for a P5-billion to P10-billion loan to finance expansion this year, banking sources said. A Tanduay insider confirmed the deal, but declined to elaborate. Market sources said the bank is now forming a consortium for the syndicated loan. The Sy-led bank has invited Rizal Commercial Banking Corp., Equitable PCIBank and Chinabank for the long-term financing deal with the publicly listed liquor company. "The borrowing will be within the quarter," a market source said. Sources said part of the loan proceeds will go to refinancing existing short-term loans, while another portion is set for capital expenditure. A unit of Tanduay Holdings, Inc., Tanduay Distillers has been buying into liquor industry-related firms such as Asian Alcohol Corp. and Absolute Chemicals. It recently paid P814.83 million for Asian Alcohol and P432.96 million for Absolute Chemicals. Asian Alcohol, formerly owned by the Parsons family and later bought by Prior Holdings, Inc., is based in Bacolod City, while Absolute Chemicals has a factory in Batangas. A treasurer of a foreign bank said companies may go on a borrowing spree this year given the prevailing optimism in the financial markets and the country’s economic environment. "We can expect corporate borrowing this year because market conditions are good," he said. He said the government is not expected to embark on more borrowings this year, which means that government bonds and debt papers will not compete with corporate debt papers. The Tanduay Rhum maker started operations in 1854 in a compound off the banks of the Pasig River. In 1988, Twin Ace Holdings Corp., owned and managed by the Lucio Tan Group of Companies, acquired Tanduay from the Elizalde family. The new management modernized and expanded to boost the distillery’s production capacity by 50 times. Tanduay Holdings closed at P3.3 from P3.25 in Tuesday trading.