Hopes are high for the total rehabilitation of the Victorias Milling Company in the coming years but the optimism is tempered with due caution, lawyers of VMC said.

Santiago Gabionza Jr., Jessica Anne Lacson and Celina Esther Cua made the statement in their letter to the Philippine Stock Exchange on behalf of their client on February 24, which was released as corporate disclosure by the PSE on March 6.

"Although there is much hope for VMC's rehabilitation in the next years to come, this optimism is tempered with due caution," the lawyers from Villanueva, Gabionza and De Santos said.

They said that "while the company's progress appears promising, nevertheless, there are existing concerns that require continuous attention and management by VMC in order to fulfill the company's objectives."

The country's largest sugar refinery suffered a near-collapse in 1996 and was then granted a suspension of payments status under the Securities and Exchange Commission and a Management Committee appointed by the SEC took over management control.

To date, the lawyers said that VMC's Debt Restructuring Agreement has been assented to and approved by 32 out of 33 creditors which covers 99.33 percent of its total loan obligations of more than P7.917 billion as of June 30, 2001.

They said that the company has also demonstrated its capability to deliver its commitments and perform its obligations under the DRA by making timely payments to its participating creditors. From Sept. 1, 2003 to Sept. 1, 2005, it made total interest payments to its creditors of P845.232 million and P12.641 million, which is equivalent to 25 percent of its trade suppliers.

VMC's targets under the Approved Rehabilitation Plan are also coming to fruition, they said, including the reduction of manpower by 52.3 percent vis-à-vis its proposed reduction of 53 percent, improvement of sugar operations above its projections for crop years 2001 to 2003, divestment of non-profitable business units, and the sale and merger of non-core assets and businesses.

The proposed sale of Victorias Foods Corp. is one of the key elements of the Approved Rehabilitation Plan.

The lawyers said that with these developments, together with the active participation of the board, corporate officers and employees to revive the company and the flourishing performance of VMC operations, "it is reasonably expected that VMC will, in due time, attain financial soundness."

"However, the road to successful rehabilitation is not without obstacles, as the key to sustaining financial viability is dependent on the continuing success of its Approved Rehabilitation Plan, its DRA, stability of the price of sugar, and maintained industrial peace," they added.*NLG

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