Rengo Co Ltd has confirmed that it has made a significant agreement with SCG Packaging Public Co Ltd, (a Siam Cement Group company). The agreement focusses on the underwriting of an increase in capital of United Pulp and Paper Co., Inc. (UPPC), a containerboard producer in the Philippines. In addition, Rengo will acquire of 25% of the shares in UPPC.
Rengo’s underwriting of the capital increase of UPPC is subject to approval by the Philippines Securities and Exchange Commission, and it is planned that the acquisition of the shares will be completed during the Q1 2020.
UPPC has a production capacity of 230,000 tonnes of containerboard from two paper machines at its mill in Calumpit, Bulacan, approximately 50 km north of Metro Manila and is the leading domestic supplier of containerboard in the Philippines. The company is currently in the process of building a third paper machine which it plans to complete by the end of 2020 and which will double the production capacity when it becomes operational.
In the Philippines, as in other Southeast Asian countries, there continues to be strong economic growth and there has been a market expansion in the packaging materials market in line with the increase in domestic consumption, so it is expected that there will be increasing demand for containerboard. Rengo’s equity participation in UPPC will contribute to the further economic development of the Philippines as well as producing synergies with Rengo Group companies in Japan and overseas. Rengo also says that with the possibility of future advancement into the corrugated business in the Philippines, it will strengthen the supply system for responding to globalised packaging needs.