JG Summit Holdings, Inc. (JGS) and subsidiaries continue to be strong and resilient in the first half of 2020 (1H20) despite the disruption brought about by the COVID-19 pandemic. The implementation of the enhanced community quarantine (ECQ) starting mid-March has severely impacted the operations of its airline, petrochemicals, malls & hotels operations but the severe impact was blunted by the resiliency of its food, banking and office business segments amidst the tough environment which provided some cushion.
JGS had a cash balance of 70.9 Billion Pesos as of end of 1H20 while current and short-term debts stood at 71.9 Billion Pesos. JGS’ diverse operations allowed it to generate cash from operations of 3.6 Billion Pesos. The pandemic did not entirely dried JGS’ cash from operations.
At the JGS parent level only 6.1 Billion Pesos of debt is coming due in the near term while its cash at the parent level is 17.5 Billion Pesos. JGS has enough liquidity to address short term debts.
Loan agreements of JGS debts contain provisions which, among others, require the maintenance of specified financial ratios at certain levels and impose negative covenants which, among others, prohibit a merger or consolidation with other entities, dissolution, liquidation or winding-up, except with any of its subsidiaries; and prohibit the purchase or redemption of any issued shares or reduction of registered and paid-up capital or distribution of assets resulting in capital base impairment. JGS as a group has complied with all of its debt covenants as of June 30, 2020.
JGS’ balance sheet remains healthy. Consolidated gearing and net debt-to-equity ratios were at 0.72 and 0.55, respectively as of end of 1H20.
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