May 22, 2017 | MANILA, PHILIPPINES

Chelsea Logistics secures $220-million loan from Bank of China

CHELSEA Logistics Corp. (CLC) has secured a $220-million bridge loan from Bank of China Ltd., the proceeds of which will be used for the acquisition of a substantial stake in integrated transport solutions provider 2GO Group, Inc.


Davao-based tycoon Dennis A. Uy, who is the founder and chairman of CLC, signed the loan agreement with Bank of China Country Head Deng Jun on Thursday.

The loan is part of the $3-billion financing package the Bank of China committed “for the development of infrastructure and other strategic industries in the Philippines” during President Rodrigo R. Duterte’s state visit in China last October 2016.

“Bank of China has demonstrated its commitment to be a partner in helping the Philippine economy grow, and we look forward to further cooperation with the Udenna group,” Mr. Jun said in a speech during the signing ceremony.

Mr. Uy is also president and chief executive officer of Udenna Corp., parent company of CLC.

The loan for CLC will be used for its acquisition of a 32% stake in 2GO through an affiliate. In March, CLC acquired the outstanding capital stock of Udenna Investments BV (UIBV), which has economic interests in KGLI-NM Holdings, Inc., which in turn has direct ownership in the controlling shareholder of 2GO, Negros Navigation Co., Inc.

“Bank of China views the further development of the shipping and the logistics business to be a vital component of infrastructure development. Efficient shipping and logistics are key components to boost the foreign and domestic trade,” Mr. Jun said.

The $3-billion will be rolled out for various projects in the next five years, with the bank noting that this amount is the bare minimum for the commitment and could increase in the future.

“We would like to finance the infrastructure and as well finance the other important industries in the Philippines to support the economy’s growth,” Mr. Jun said.

The executive added that in terms of infrastructure, they are looking at highways, tollways, and railways, while financing could also extend to trade and small to medium enterprises.

Asked if the subsequent loans will involve Udenna, Mr. Jun said they are keen on working closely with the group in the future.

For his part, Mr. Uy said he envisions CLC to be a super-shipping logistics company in the future, serving all the islands of the country “which complements the logistics -- serves end to end, from manufacturing up to the consumer.”

The country’s conglomerates have recently ramping up their logistics businesses, with Metro Pacific Investments Corp. acquiring Ace Logistics and SM Investments Corp. purchasing shares in 2GO earlier this year.

“They’re bullish about the economy. This infrastructure growth leads to more shipment of goods and with our demographic, going to the countryside, we really need shipping from one place to another,” Mr. Uy said.

CLC is currently awaiting approval from the Securities and Exchange Commission for an initial public offering of up to P8 billion (IPO), through the sale of 546.59 million primary shares priced at a maximum of P14.63 apiece.

Proceeds from the IPO will be used to fund the firm’s expansion, with P4 billion allotted for the acquisition of other firms and P2.73 billion for the purchase of more vessels and equipment. -- Arra B. Francia