JG Summit in P40-b expansion

JG Summit Holdings Inc., the holding company of tycoon John Gokongwei, earmarked P40 billion for capital expenditures this year to bankroll the expansion of real estate, food manufacturing, airline and petrochemical businesses.

JG Summit senior vice president and chief strategy officer BJ Sebastian, however, said this year’s capital spending was lower than last year’s P50 billion, which was spent mainly for the construction of a naphtha cracker plant in Batangas City.  He said the plant was expected to start commercial operation this year.

Sebastian said the bulk of this year’s P40-billion budget would be used for the group’s property, food manufacturing and airline businesses.

Robinsons Land Corp., the group’s property arm, earlier said it would spend P16 billion to put up more shopping malls, residential projects as well as hotels and office buildings for business process outsourcing companies.

JG Summit’s food manufacturing unit Universal Robina Corp. also allotted P9 billion in capital spending this year primarily to fund the expansion of food and feeds businesses as well as the construction of a bioethanol plant.

Meanwhile, JG Summit president and chief operating officer Lance Gokongwei said the recent acquisition of a 27-percent interest in power distributor Manila Electric Co. would have a significant impact on the company’s portfolio.

“The equity stake should probably make it second, in terms of contribution to company after URC,” Gokongwei said.

JG Summit successfully completed the acquisition of a 27.1-percent stake in Meralco from San Miguel Corp. for P72 billion in December last year.

Gokongwei said he also expected URC and Robinsons Land to continue to perform well. He said the group was looking at higher earnings contribution from a stake in Singapore-based property development for United Industrial Corp.

“In a nutshell, things are fairly good. The economy is robust and most of our businesses are doing well,” Gokongwei said.

JG Summit raised P30 billion last week from fixed-rate bonds issued in three tranches: P24.51 billion five-year and six-month bonds with a coupon rate of 5.2317 percent per annum, P5.31 billion seven-year bonds with a coupon rate of 5.2442 percent per annum and P176.34 million 10-year bonds with a coupon rate of 5.3 percent per annum.

JG Summit in P40-b expansion