Uy’s Chelsea cut jobs, sent IOUs as losses bulged to P3.3B

MANILA, Philippines — The logistics group of Davao-based businessman Dennis A. Uy cut jobs, sought loan waivers and shed other assets apart from selling affiliate 2GO Group Inc. in a bid to stay afloat this COVID-19 pandemic.

In its 2020 annual report, Uy’s Chelsea Logistics & Infrastructure Holdings Corp. said the pandemic severely disrupted business operations and demand for its services.

For the full-year, the company reported a net loss of P3.3 billion—nearly three times larger than the previous year’s loss of P832 million.

Revenues fell 35 percent to P4.67 billion while debt obligations, both short-term and long-term, increased last year.

By the end of 2020, Chelsea registered a deficit of P3.37 billion.

The company’s financial statements were prepared by management on a “going concern” basis, an accounting term meaning it expects business operations to continue.

But in an attached letter, independent auditor Punongbayan & Araullo said this assessment involved “significant assumptions, such as forecasted revenues and costs, that are subject to high degree of estimation uncertainty, highlighted by the continuing impact of the COVID-19 pandemic.”

Nevertheless, Chelsea also detailed the steps it took to weather the pandemic, saying it expected to “recover from its financial and operational risks and impact.”

These measures included cash infusions from shareholders, the deferral of capital spending for new projects and renegotiating payment terms with suppliers.

Cost-cutting measures also involved job cuts affecting 22 percent of its workforce in 2020, Chelsea said.

To address swelling debts that were used to finance its rapid expansion in recent years, Chelsea said the group “continued to negotiate with banks to refinance or restructure its existing loans.”

It also requested waivers from lenders not to demand immediate payment for its loans. This was after the group’s finances fell below certain ratios, including those measuring its ability to settle its debts.

Chelsea said it has not yet received any written notice “that the loans are due and demandable, which is provided for in the loan documents as a basis to reclassify the loan to current.”

Chelsea ended the year with total debts of P17 billion, up 4.2 percent. The current portion or those due within the next year stood at P6.44 billion.

To further ease pressure on its balance sheet, Chelsea sold last month its nearly 32-percent stake in 2GO to SM Investments Corp. and Singaporean fund Trident.

The group also sold a vessel, MV Trans-Asia 5, to a third party last Jan. 15. It said two more vessels would be sold in the next 12 months.