Ayala Land’s (ALI) short-term and current debt at 54 Billion Pesos as of end of 1H 2020, enough to give shareholders some thrill

First semester 2020 results of Ayala Land, Inc. (ALI) showed that its short -term debts amounted to 41.5 Billion Pesos while the current portion of the long-term debts amounted to 12.5 Billion Pesos for a total of 54 Billion Pesos. This figure should make ALI shareholders nervous because as of end of the first semester of 2020 ALI had only a cash balance of 16.4 Billion Pesos.

Fund raising of ALI includes the sale of its shares in AREIT at the AREIT public offering, the sale of an office building to AREIT, and the issuance of a five-year bonds. The secondary sale of its AREIT shares at the AREIT public offering and the sale of an office building in Cebu is slated to gross ALI around 13.6 Billion Pesos. But since the oversubscription allocation was only partially executed despite ALI reporting that the AREIT offering was two times (2X) oversubscribed, the AREIT offering might gross ALI slightly less than the expected 13.6 Billion Pesos.

The 5-year bond issuance is set at 6.25 Billion Pesos. In total the fund raising exercise of ALI would give it additional funds of around 19.9 Billion Pesos. Of the 19.9 Billion Pesos especially the bond issuance portion, 4 Billion Pesos is already allocated to satisfy the 4 Billion Bond due this coming October 2020.

ALI has to do something considering that 19.9 Billion Pesos is only a fraction of the 54 Billion Pesos short-term and current debts. Cash generated from operations, judging from the first semester 2020 results, is not certain. In the first half of 2020 saw ALI burning 28.9 Billion Pesos of cash in its operations a dramatic increase compared to the 4 Billion Pesos it burned in the first half of 2019. The cash burn of 28.9 Billion Pesos in its operation is horrific.

Those facts should give ALI shareholders enough thrill. For the Ayala group with all the right resources and relationships, it might just be a walk in the park. By the way, as of end of June 30, 2020 ALI may had already debts carried at 43.8 Billion Pesos from its related-party bank.

Disclaimer and Disclosure: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent view point. Accuretti Systems Inc. in the course of day to day trading may have own, or is considering buying or disposing, the shares of the companies mentioned in this commentary.

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