Franklin Baker seeks loan restructuring
A group of six banks is in the “homestretch” of negotiating restructured terms for a P6.3-billion syndicated loan extended to financially distressed Franklin Baker Co. of the Philippines, a major producer of desiccated coconut that is now in need of a white knight.
The restructured debt will be “finalized shortly” by the bank syndicate, which is composed of Bank of the Philippine Islands (BPI), BDO Unibank Inc., Land Bank of the Philippines, Metropolitan Bank and Trust Co. (Metrobank), Security Bank Corp. and Maybank, according to people familiar with the matter.
Among the lenders, BPI has the biggest exposure to Franklin Baker, which owed P2.3 billion to the Ayala-led bank. BDO, the largest bank in the Philippines in terms of total assets, lent around P1.4 billion to the company.
The restructuring is aimed at preventing a default, as Franklin Baker had been struggling to settle its debts amid financial troubles that had prompted the company to seek potential investors.
The people, who requested anonymity as the talks are private and still ongoing, said a key point in the restructuring talks was for Franklin Baker to put in around P2 billion in equity, stressing that the company still has a lot of potential due to its “good client base”.
“Some would like the banks to take a haircut. That would be hard,” a source told the Inquirer, adding that creditors had already given Franklin Baker “concessional rates” while the terms had been “stretched” to help it pay its obligations.
Wanted: savior
Franklin Baker, formerly owned by General Foods and Kraft Foods, has been producing desiccated coconut and other coconut products for over 100 years and continues to supply coconut ingredients to the world’s major confectionery and bakery producers, as well as other major producers in Europe, Latin America, Asia and the Middle East.
It exports to over 50 countries worldwide, with the United States as its major market.
Franklin Baker operates three manufacturing facilities in the Philippines, one located at San Pablo, Laguna and two in Davao del Sur.
The first two facilities it owned have a combined annual capacity of 65 million pounds of desiccated coconut, and 4 million liters of coconut water concentrate or 60 million liters of single strength coconut water.
The company later acquired its second coconut processing plant in Davao del Sur in 2014, which at the time was expected to double its production capacity of desiccated coconut and coconut water concentrate.
But according to a November 2024 market report by Chelmer Foods, a US-based supplier of various food products, Franklin Baker temporarily stopped operations at all three of its factories, which might “continue until a viable solution is found” for its financial troubles.
The plant shutdown is expected to continue until Franklin Baker finds a “viable solution” to its financial troubles, the report said, adding that the impact on supply was “expected to be profound” given the company’s substantial market share.
It was reported early this month that the Metro Pacific Group might be the white knight that Franklin Baker has been waiting for, as the Manuel V. Pangilinan-led firm eyes a P1-billion buyout of the iconic desiccated coconut producer.
