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Prelude to SM takeover: 2GO breaches debt pact on P3.5B loan

2GO has flunked its debt commitment on a P3.5 billion loan to BDO.

But its new majority owners, the Sy-blings who also control BDO, have agreed to give 2GO a free pass on its loan commitments in 2020 and 2021.

“On December 31, 2020, the group was not compliant with the debt to equity ratio under the group’s long-term loan agreement with BDO. However, the group obtained a waiver letter from BDO which waives the financial covenant on December 31, 2020 and 2021,” said 2GO.

Under its covenant, 2GO has to maintain a debt to equity ratio of 2.5:1 or better.

2GO’s debt to equity ratio surged to 7.85 in 2020 from 3.61 in 2019 as stockholders’ equity plunged by 53 percent to P1.667 billion. 2GO more than doubled its losses to P1.834 billion in 2020. It has amassed a total of P4.51 billion losses since 2017.

2GO signed the five-year, P3.5 billion loan in 2018 to refinance its previous loans with the bank and bankroll its capital expenditures.

The interest rate ranged from 5.25 percent to 6.23 percent.

In 2020, 2GO was owned by bilyonaryo Dennis Uy’s KGLI-NM Holdings (35.22 percent), SM Investments Corp. (30.49 percent), and Dutch firm China-Asean Marine B.V. (22.36 percent). 2GO president Frederic Cuyegkeng DyBuncio is also president of SM Investments which controls BDO.

Last March, SM Investments agreed to buy out Dennis Uy’s stake in 2GO for P6.6 billion and increase its stake to over 60 percent.

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