JG Summit Holdings Inc. on Monday said it is infusing an additional P11 billion into its petrochemical operation under JG Summit Olefins Corp. (JGSOC), which will be used to pay off debt and support its operations.
In exchange for its investment, JG Summit will get 1.67 billion shares, valued at P6.57 apiece. It is equivalent to 20.73 percent of the petrochemical company.
“JGSOC will use the funds to pay off its expansion project obligations and to support its operations during a period of declining market demand and rising input costs,” the company said in its disclosure.
The investment will be done via a one-time cash infusion basis.
JGSOC is engaged in acquiring, designing, constructing, erecting, assembling, rehabilitating, expanding, commissioning, operating and maintaining a naphtha cracker plant and related facilities for the production of polymer grade ethylene, polymer grade propylene, pyrolysis gasoline, mixed C4, pyrolysis fuel oil and their by-products.
In January to September, it recorded losses of P8.8 billion and revenues of P25.5 billion.
The company said JGSOC sold 493,000 metric tons of its products for the period, up 13 percent from last year.
“However, revenues for the period remained largely flat at P25.5 billion as increased volumes, especially in the third quarter after its cracking operations resumed in June, cushioned the impact of lower petrochemical selling prices compared to last year,” JG Summit said.
JG Summit said its petrochemical unit is focused on increasing its sales volumes, improving pricing strategies, and managing its costs.
“The operations restarted in phases, beginning with the polyethylene [PE] 1 plant in April followed by the PE2 plant in May. The polypropylene (PP), naphtha cracker, aromatics and butadiene extraction units restarted last June and the PE3 plant in August.”
Last March, JG Summit reported that its income plunged 86 percent to P700 million last year, despite a double-digit increase in its revenues.
The company said last year’s attributable income included the P6 billion in gains and contributions from its food manufacturing arm’s discontinued Oceania operations.
JG Summit said its core income, which included the portfolio management gain that the parent company realized from the sale of some of its shares in Manila Electric Co., registered a twofold increase to P6.2 billion.