PhilGuarantee: No pending application for Chelsea loan yet

MANILA, Philippines — State-run Philippine Guarantee Corp. (PGC) said it has yet to receive the application seeking guarantee cover for Chelsea Logistics and Infrastructure Holdings Corp.’s P700-million loan from any bank.

In a text message, to reporters, PhilGuarantee clarified it does not deal directly with borrowers, but rather banks that extend loans to private corporations.

“We deal with banks. So far, we have not received any application from any of our partner-banks on Chelsea,” PhilGuarantee said.

The state guarantor also reiterated this in a text message to Finance Secretary Carlos Dominguez, which he shared with reporters.

“Understand Chelsea has a pending loan application with a local bank. It depends on how much the bank will approve and then it can apply for credit guarantee coverage from PhilGuarantee,” the agency said.

“No bank has yet applied for guarantee coverage for a loan to Chelsea,” it added.

In a disclosure to the Philippine Stock Exchange, Davao-based businessman Dennis Uy’s listed shipping and logistics firm announced that it was seeking a government guarantee for a P700 million loan, which will be used to finance the acquisition of a shipping vessel.

Chelsea said it needed the guarantee as it may already reach the single borrower’s limit with one of its financing banks.

As set by the Bangko Sentral ng Pilipinas (BSP), the single borrower’s limit caps the total amount of credit accommodation to any person or entity to 25 percent of the bank’s net worth.

“For this loan obligation for vessel acquisition, the group will actually execute a chattel mortgage over the subject vessel and thus the loan is fully secured. Hence, there is no exposure for PGC when it extends this guarantee to the group,” the company said.

Furthermore, Chelsea said it is capable of covering all its loan obligations, supported by its strong EBITDA (earnings before interest, taxes, depreciation and amortization).

Chelsea Logistics posted a net profit of P20 million in the nine months to September 2019, down 54 percent compared to the P43 million posted during the same period in 2018 owing to higher finance costs and depreciation and amortization due to its expansion program.

On the other hand, EBITDA grew by 52 percent to P2 billion as a result of higher depreciation and interest incurred from the operations of seven new vessels, which commenced operations on various dates from the fourth quarter of 2018 to the third quarter 2019.