By James A. Loyola
Chelsea Logistics Holdings Corporation (CLC) of businessman Dennis Uy is bullish about the prospects of the shipping industry and will continue to be on acquisition mode so it can grow in the Philippines and, eventually, in Asia.
The firm is embarking on an initial public offering (IPO) of shares to fund an expansion program that would modernize and expand its fleet, extend its reach within the country and in Asia, and open avenues for new businesses, including shipbuilding and electronic commerce.
“We are sailing into relatively calm waters, where opportunities offered by strongly growing Philippine and Southeast Asian economies and increasing intra-regional trade abound,” said Uy, chairman and founder of the company named after the businessman’s eldest daughter.
He added that “the funds to be raised from the IPO will allow us to modernize our fleet, acquire other shipping companies, or even buy or build our own shipyard.”
Uy’s confidence is couched on the fact that the Philippine economy is one of the fastest growing not only in Asia but around the world.
A burgeoning Philippine tourism industry and increasing regional trade amid the slowdown in developed countries are also expected to drive the growth of CLC in the coming years.
As part of efforts to improve efficiencies and reduce operational costs, CLC earmarked bulk of the proceeds from its IPO for the acquisition of more existing operations as well as the purchase or upgrade of ports, port facilities, containers, machineries and equipment and a shipyard.
About P2.49 billion will be used to fund capital expenditures for fleet expansion.
This includes the acquisition of a medium-range (MR) tanker in September, 2017 with a total estimated cost of $35 to $50 million.
This will establish the firm’s regional presence in shipping and will service the requirements of Phoenix Petroleum Philippines, Inc. in importing its fuel inventories from Taiwan, Indonesia or Singapore to the Philippines.
“We will continue to acquire more tankers in anticipation of a further increase in the Philippines’ oil consumption, as more factories open and more cars hit the road,” Uy said.
Subsidiary Trans-Asia Shipping also plans to acquire two cargo vessels also in September 2017 at a total estimated cost of P550 million.
CLC is also allotting P800 million for the acquisition of a shipping company currently undergoing due diligence.
Meanwhile, P245 million will be used to develop facilities to support the core business of the company. These include the acquisition and or upgrade of ports, port facilities, containers, machineries and equipment and a shipyard as these activities are projected to reduce operational costs and improve efficiencies for the company.
“Half of the company’s fleet needs to be dry-docked every two years. Having our own shipyard would ensure the quality of the maintenance of our ships, keep our costs down and give CLC another source of income,” Uy said.
Its ongoing efforts to expand and offer better shipping and logistics position CLC well to capture the opportunities brought by the integration of the ASEAN economies.
“We continue to grow our capability in Southeast Asia, especially with the evolving ASEAN Economic Community. In ASEAN — as in the Philippines — there are a lot of low hanging fruits to pick,” said Uy.
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