Bandwagon bust: Dennis Uy abandons P2.4B e-Commerce project, gets stuck with unpaid China Bank loan

Davao-based businessman Dennis Uy has thrown overboard Chelsea Logistics and Infrastructure Holdings’ e-commerce project due to his failure to stop his company from bleeding over the last four years.

In a report to stockholders, Chelsea said it terminated the construction of a warehouse in Taguig last year.

“Pursuant to the plan of the group to venture in e-Commerce, the management has reevaluated its intention for these properties, and has deemed that the use of the properties is currently undetermined,” said Chelsea.

Chelsea has already sunk in P2.432 billion into the abandoned project – P1.199 billion for the land and P232.6 billion for construction. Uy, however, is stuck with a P1.25 billion loan with China Banking Corp. of which it has already withdrawn P800 million as of end-2021.

The loan, which was signed in August 2019, has a fixed interest rate of 7.25 percent in the first 10 years and is subject to repricing in the last five years. The Taguig property was used as collateral for the China Bank loan. Chelsea was supposed to start payment on the loan in August 2021.

But due to its mounting losses, Chelsea has broken its covenant with Chinabank with its 5:1 debt-to-equity ratio exceeding the required 3:1 and its current ratio below the agreed level of at least 1:25.

Chelsea had previously reckoned that it could easily jump into the e-Commerce bandwagon with its freight forwarding business, Worklink Services Inc. (WSI). But the project was not only hammered by the pandemic which struck in March 2020 in the middle of the warehouse construction, but also by its deteriorating finances.

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