Davao business-tycoon Dennis Uy downsizes logistics biz, sells entire 2GO stake to SM Group

AdChoiceTV News — Businessman Dennis Uy’s Chelsea Logistics and Infrastructure Holdings Corp. is disposing of its entire stake in 2GO Group Inc. to Sy-led SM Investments Corp., seeking to save itself from further losses amid the pandemic.

The sale was disclosed by the involved parties through separate statements to the local bourse on Friday.

Through its subsidiary KGLI-NM Holdings Inc., listed Chelsea is selling its remaining stake of around 31.73% in the shipping line to SMIC—the listed conglomerate of the Sy family—at ₱31.73 per share.

Sale conditions will be completed within the next three months, Chelsea noted. Proceeds from the divestment will be used to pay its debt used for the acquisition of the shares.

Chryss Alfonsus V. Damuy, its president and chief executive, said the move was necessary to keep Chelsea from sinking with 2GO as the global health crisis continues to batter the shipping industry.

“With the divestment, Chelsea will not be impacted by 2GO losses, which will aid the Company in recovering from the current COVID-19 pandemic,” he was quoted as saying in the filing.

2GO’s net loss in the first nine months of 2020 widened to ₱1.043 billion from ₱971.5 million losses in 2019. This, as total revenues dropped to ₱13.69 billion versus the ₱16.22 billion booked a year earlier.

For the same period, Chelsea swung to a net loss of ₱2.6 billion, a reversal from a profit of ₱20 million in 2019.

“With our numerous group-wide initiatives currently being undertaken, we are confident that Chelsea will be best prepared and positioned to take advantage of the recovery of the industry as we move forward,” the Chelsea executive added.

After the acquisition, SMIC will gain majority control in 2GO as its stake will be boosted to 62.22 percent, making the shipping company a subsidiary of SMIC.

Currently, SMIC holds 30.49% in 2GO.

In a filing, SMIC also said that its board of directors approved the conduct of a mandatory tender offer to all remaining stockholders of 2GO, also at an offer price of ₱8.50 per share.

SMIC is engaged in retail, property, and financial services businesses. It also has equity investments in other industries such as premium commercial buildings, leisure, logistics, food, and mining.

Reporting by Albert Rovic Tan

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