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Chelsea Logistics (C) 25% owner of 3rd telco also faces current debt funding problems

Chelsea Logistics and Infrastructure Holdings Corp. (C) as with other conglomerates is also facing current debt funding problems.

Chelsea (C) is a 70% owned subsidiary of Udenna Corporation.  It is primarily engaged in shipping.  It owns several well-known customer facing subsidiaries such as Trans-Asia Shipping, Starlite Ferries, Chelsea Shipping, and the Supercat Fast Ferry Corporation. It counts 2GO Group, Inc. (2GO) as an associate with its 35.22% shareholdings in the shipping and logistics company. SM Investments Corporation (SM) owns the other 30% of 2GO.

Despite primarily operating in shipping and logistics, Chelsea (C) subscribed to 25% of the equity of the third telco, Dito Telecommunity Corporation (Dito).

Shipping and logistics was not spared by the pandemic.  In the first half of 2020 (1H20), Chelsea swung into a net loss of 1.3 Billion Pesos.  Although it went into a net loss, Chelsea was able to squeeze a little cash of 522 Million Pesos.  It ended the period 1H20 with a cash balance of only 211 Million Pesos.

With a meager cash balance and low to none cash generation from operations, the current interest bearing loans and borrowings at the end of 1H20 of 6.2 Billion seems to be a very big problem.

The 6.2 Billion Pesos borrowings does not include the payables to DITO CME Holdings Corp. (DITO) of around 362 Million Pesos. DITO CME Holdings Corp. is the publicly listed holding company with a ticker symbol of DITO.  DITO’s primary assets are the receivables from Udenna Corp. and Chelsea.

On top of those current loans payable, is Chelsea’s unpaid subscription of shares of third telco, Dito Telecommunity.  The unpaid share subscription in Dito Telecommunity amounted to 3.6 Billion Pesos and is presented as Trade and Other Payables in the balance sheet. On May 10, 2019, Chelsea subscribed to 40,833,333 common shares and 22,916,666 preferred voting shares or equivalent to 25% interest of Dito’s authorized capital stock for a total amount of P4.1 billion. Out of the subscribed shares, P3.6 billion worth of shares remains unpaid.

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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