Monde Nissin led by bilyonaryo president Betty Ang has issued a guarantee or parent letter of support to the P6.9 billion loan of its British alternative meat subsidiary, Marlow Foods.
The guarantee was issued to Citicorp International Limited who was acting as an agent for and on behalf of certain financial institutions that granted the Quorn maker a £113 million five-year term loan and £10 million revolving credit facility.
That loan is expected to be worth £103 million by January 2022. MONDE took over Quorn in 2015.
MONDE’s move to issue a guarantee for a loan that was contracted by Marlow Foods more than two years ago has raised questions among market watchers.
“Why did Citicorp, or the lenders it represents feel the need for such a guarantee? We don’t want to read too much into it but this is probably worth keeping an eye on.” asked Abacus Securities.
Abacus pointed out that MONDE had tweaked the use of some of the proceeds of its initial public offering (IPO) allocated for Quorn just a month before issuing the guarantee.
The MONDE board announced on November 23 its plan to divert P7.105 billion previously earmarked for the expansion of Quron to “operating expenses (not in excess of P4.1 billion) and/or capital expenditures to expand the capacity of its meat alternative business.”
Instead of adding more capacity, MONDE said it would use the IPO proceeds for “brand building, research and development, influencer partnerships, and new process capabilities.”
MONDE reported “tapered sales” of Quorn in the first nine months of 2021 with core profits plunging 17.5 percent year-on-year during the period.