Megawide Construction Corporation’s (MWIDE) current notes and loans payable as of June 30, 2020 stood at 12.3 Billion Pesos. While, MWIDE’s cash balance as of that date stood at 4.8 Billion Pesos only.
As of the first half of 2020, MWIDE was generating cash from operations. In that period it was able to generate 2.4 Billion Pesos from its operations but those cash were already used for capital expenditures and debt repayments.
As a capital raising exercise, MWIDE planned to issue a new series of perpetual preferred shares. It was planning to raise 5 Billion Pesos from the preferred share issuance. As of this writing no new disclosure was made regarding the progress on the planned preferred share issuance.
Even with the preferred share issuance, there might still be a shortfall in the funding requirements. MWIDE may have to ask accommodations from banks regarding it current debts.
As of the end of the first semester of 2020, MWIDE had asked banks for accommodations. GMR Megawide Cebu Airport Corporation (GMCAC), a 60% owned subsidiary of MWIDE, asked the banks on May 29, 2020 for the deferment of the principal and interest that will
fall due on June 15, 2020 to July 15, 2020 or a 30-day grace period. On June 11, 2020, GMCAC received a reply from the banks unanimously approving the 30-day grace period for principal and interest, of which interest on the outstanding principal shall continue to accrue during the 30-day grace period.
Another subsidiary (100% owned), MWM Terminals, Inc. (MWMTI) had requested for the financial covenants of its loan facility with a local universal bank not to be enforced. MWMTI exceeded the agreed Debt-to-Equity Ratio and had lower than the stated Debt Service Coverage Ratio. MWMTI had not received any written notice from the bank that the loan is already due and demandable, which is provided in the loan agreement as basis to classify the loan as current. The total carrying value of bank loans of MWMTI amounting to P3,900.0 million both in June 30, 2020 and December 31, 2019 respectively are presented under the non-current portion of bank loans.
Good thing about MWIDE is that it has been candid with the status of its debts and it is generating cash from operations. This is maybe the reason why its existing perpetual preferred shares (MWP) is still trading at a premium.
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.
You many now follow our views and commentaries in Google News in the web or in the Google News app. Just search accuretti.com (or click the link) in Google News. Then click the star to follow.