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A backstory to the CHP loan-covenant accommodation by BDO seen from Cemex amassing more CHP shares and Henry “Big Boy” Sy Jr. liquidating a few SM shares

In the month of September 2020 Cemex Asian South East Corporation (Cemex) continued to accumulate Cemex Holdings Philippines, Inc. (CHP) shares from the public through open market purchases in the Philippine Stock Exchange.  Cemex was very disciplined in its purchases, making sure that it doesn’t buy CHP shares higher than the SRO price of 1.54.  CHP shares were bought by Cemex at a price ranging from 1.40 to 1.54.

The continued buying by Cemex of CHP shares boosted its stake in CHP to 77.74% as end end of September 2020.  This action of Cemex of continuously amassing CHP shares hints a backstory to the loan-covenant accommodation by BDO to CHP.

It can be recalled that on July 28, 2020 CHP disclosed that it reached an agreement with BDO that debt covenants were amended to allow CHP to defer compliance with certain financial terms of the debt covenant with its loan to BDO until June 30, 2021.

It could be inferred from that agreement that CHP has been struggling from complying the financial terms of the debt covenant.  And after that disclosure Cemex began accumulating CHP shares.  Why would BDO allow Cemex to use cash to buy CHP shares when in fact CHP is struggling from complying with its debt covenant?  BDO could have required Cemex to put the cash instead to CHP so that CHP can stay within the debt covenant. But it didn’t.

After that disclosure in August 2020, Cemex began amassing CHP shares and Big Boy began liquidating some of his SM shareholdings. There could be a backstory to that BDO debt covenant accommodation to CHP.  It seems like a consensus among the parties has been reached. Question is, at what price?

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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