Dennis Uy seeks gov't guarantee for P700-million loan

MANILA, Philippines – Dennis Uy's Chelsea Logistics and Infrastructure Holdings Corporation confirmed that it is seeking a government guarantee to secure a P700-million loan for an acquisition of another vessel.

In a disclosure to the Philippine Stock Exchange (PSE) on Monday, February 17, Chelsea Logistics confirmed parts of a report by the Philippine Star that it is working with the Philippine Guarantee Corporation (PGC) as the group "may reach" the single borrower's limit with one of its financing banks.

According to a 2004 Bangko Sentral ng Pilipinas circular, banks can only loan up to 25% of its net worth to a single company to avoid overexposure and minimize risk.

Total loans may be increased by an additional 10% of the net worth of a bank, provided that additional liabilities are adequately secured by trust receipts, shipping documents, warehouse receipts, or other similar documents.

Chelsea Logistics did not disclose the name of the bank, but cited that it is one of the main banks which "supports the shipping industry."

"For this loan obligation for vessel acquisition, the group will actually execute a chattel mortgage over the subject vessel and thus the loan is fully secured. Hence, there is no exposure for PGC when it extends this guarantee to the group," Chelsea Logistics said.

It added that the guarantee to be obtained from PGC is only limited to the P700-million loan to finance a single vessel and is not related to any of its other loan obligations.

As of September 2019, the shipping company has total liabilities of P20.98 billion and total assets of P33.95 billion, according to data from the PSE.

"Chelsea Group is capable of covering all its loan obligations supported by its strong EBITDA (earnings before interest, taxes, depreciation, and amortization)," it said.

Analysts earlier raised concerns over Uy's buying spree for companies, noting that parent company Udenna Corporation is highly leveraged or has a high level of debt.

Uy himself previously allayed speculations, saying that his companies are financially stable.

"The group will make sure that the interests of its shareholders are protected. No malicious misinformation will succeed and the Chelsea Group may seek legal action against such attacks, if necessary," Chelsea Logistics said in response to a column by the Philippine Star. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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