Chelsea reported P1.072 billion in losses in the first six months of 2021 which pushed its total red ink to P5.8 billion since 2018.
Chelse’s revenues fell by 17 percent year-on-year to P2.13 billion as cargo volumes slowed down due to the lockdowns.
Chelsea booked P792.444 million in expected credit losses, slightly higher from last year’s provision, citing “deterioration in collectability of trade receivables.”
It also incurred P241.041 million in first half losses from its 10.54 percent equity in DITO Holdings Corp., Uy’s investment arm which owns 60 percent of DITO Telecommunity.
This is 61 percent more than its net losses of P149.44 million from DITO in 2020.
Chelsea’s losses could have been worse had it not sold its stake in 2GO to the SM group for P7.46 billion in June.
Chelsea realized P154 million in gain from the sale of the shipping firm.
Amid the flood of red ink, Chelsea has been having trouble keeping up with its loan obligations since 2019.
Uy has yet to get the big banks to refinance Chelsea’s debt which increased by 18 percent to P12.431 billion as of June 2021 from P10.562 billion as of December 2020.
Chelsea admitted that it exceeded the agreed debt-to-equity ratio (it was using more loans to finance its operations versus its own funds) and fell below the liquidity (inability to pay one-year debts) and debt-service coverage ratios (cash flow not sufficient to pay its current debt) on a total of P7.602 billion loans it used for buying ships with the following banks:
1) Development Bank of the Philippines (five loans worth a total of P3.873 billion);
2) China Banking Corp. (two loans worth a combined P2.72 billion);
3) Mega International Commercial Bank, Robinsons Bank, CTBC Bank, and First Commercial Bank (total loans of P906 million); and
4) BDO Unibank (P103 million).
Chelsea said it has not yet received any written notice as of June this year from these banks demanding payment for their loans which would have reclassified these loans to current or payable within a year.
Chelsea said Rizal Commercial Bank Corp. has agreed to waive the covenant on its P111 million loan as early as December 2020.
The loan would have been demandable had the firm defaulted even without demand.
Chelsea said it has also maximized the use of debt moratorium granted by the government to distressed companies under the Bayanihan laws.
In the case of DBP, Chelsea said it applied for the government bank’s Rehabilitation Support Program on Severe Events (RESPONSE) for financially troubled firms hurt by “by natural calamities such as but not limited to typhoons.
This program grants borrowers a six-month reprieve on loan payments.
As of June 2021, Chelsea said its negotiations with banks to refinance or restructure its existing loans have yet to bear fruit.
Chelsea has P4.73 billion in other bank loans used for drydocking, working capital, and buying assets) that have no financial requirements.