Issuance aims at increasing and replenishing working capital to expand production.
by Khanh Chi
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The Board of Directors at the Thanh Thanh Cong - Bien Hoa JSC (TTC Sugar, Stock Code: SBT), recently approved the issuance of 450 bonds worth $20 million.
The bonds have a par value of around $44,000, are non-convertible, are not accompanied by warrants, are guaranteed for payment, and have a term of one year from the date of issue, maturing in 2019. They will be issued separately to fewer than 100 investors, including domestic and foreign professional investors that are organizations and individuals.
The company prioritizes commercial banks, financial institutions, and investment funds via issuing agents. The bonds are projected to be divided into several issuances, with the first in the fourth quarter of fiscal year 2017-2018. The issued price is equal to the par value.
The issuance aims to increase and replenish TTC Sugar’s working capital to expand and scale-up production and increase the efficiency of its operations, thereby optimizing production costs and promoting economies of scale. The incremental production capacity reduces fix costs and depreciation per kg of products, etc.
The company can therefore boost consumption, expand market share, penetrate medium and small segments in market niches, and target markets such as the Mekong Delta and the north and the export market. Incremental production will simultaneously bring advantages to stimulate consumption and consolidate advantages in distribution to penetrate markets and targeted segments.
Once the bonds are issued, capital structure ratios will remain safe and financial risks controlled to meet commercial banks’ requirements, of which the debt-to-equity ratio in consolidated financial statements will increase slightly, from 1.27 to 1.33 times.
TTC Sugar has consistently adhered to financial controls and operations, particularly regarding debt ratios or leverage ratios in operations. The increase in the debt ratio helps improve the company’s profitability ratio.
It has produced half of the 2017-2018 crop, or 3.1 million tons of sugarcane, representing 90 per cent of the plan. Its business results for 2017 were positive, with total consolidated assets at more than $783 million, including $314 million in consolidated equity, both up 129 per cent compared to those at the end of June last year.
Sugar consumption was 308,579 tons, or 50 per cent of the annual plan. Total sales of goods and services stood at $240 million, or 60 per cent of the annual plan, while pre-tax profit was $14.3 million, or 50 per cent, for increases of 161 per cent and 70 per cent, respectively, year-on-year.
After-tax profit was $11.4 million, up 49 per cent year-on-year, and the gross profit margin was 11 per cent. Production and operation in the 2017-2018 fiscal year saw many changes, as the corporation and outlets were restructuring and reorganizing after the M&A. Setting a challenging target of “1 million tons of sugar” by 2020, TTC Sugar is gradually implementing marketing and agricultural and manufacturing activities.
- Thanh Thanh Cong