First, the good news for Dennis Uy’s 2GO logistics firm: It would seem that most of the “restatement” prompted by a due diligence audit of the firm—but only after the Davao-based businessman had taken control of it, unfortunately—pertain to “non cash items.”
Because of this, it looks like the basic business model of the firm Uy wrested from businessman Sulficio Tagud earlier this year is intact.
Another positive element is that Uy and his partner, the SM group, now have more credible numbers with which to turn 2GO into the logistics and shipping powerhouse that each party wants.
A closer look at 2GO would reveal that its shipping business provides 60 percent of total revenue, while the logistics side provides the other 40 percent.
Coincidentally, Biz Buzz hears this 60-40 revenue source split corresponds roughly to the control Uy and the SM group exercise over the firm. That’s a neat little dividing line which may come in handy if the rising business star and the Sys decide to carve up the firm for their own respective interests.
If you have yet to be apprised on what the respective interests of either stakeholder group mean, for the SM conglomerate it is simply to have one of the country’s largest logistics firms to close the loop on its grip on the national retail chain. Whatever they have in their SM malls can be delivered straight to your home via 2GO’s couriers.
And what’s in it for Dennis Uy? Well, his shipping group — which includes Chelsea Logistics — gives him control of around 70 vessels. That number is significant because it makes Uy, according to sources, the largest private ship owner in the Philippines, in terms of gross registered tonnage.
Not a bad deal for the 43-year-old De La Salle University graduate. Not at all.
The bad news for Uy is he may have to re-price the IPO offering for Chelsea Logistics, now being prepared by underwriters (his stake in 2GO is part of Chelsea).
One did get the sense that the new owners were in a rush to acquire 2GO and any suspicion that they paid a premium for control a few months ago had been confirmed now that the company was worth slightly less than what its previous owners said it was.
To the credit of Uy and SM, they could have chosen to keep 2GO’s skeletons under wraps, but they chose the path of transparency and swallowed the bitter pill of a (hopefully) one-time restatement of the books.
Word going around is that some company insiders are thinking of going after the previous management for the “material misstatements.” Will this unfold into a legal battle? This is certainly worth watching if anyone will be sued for fraud. —DAXIM L. LUCAS
Speaking of which…
Dennis Uy’s other business concern, Phoenix Petroleum Philippines Inc., made quite an impact on the market yesterday, on the 10th anniversary of its listing on the Philippine Stock Exchange.
We’re not talking about its impact on the stock market, however, which ended 5 percent higher on the day the trading session was supposed to be closed by Uy’s friend, President Duterte.
We’re talking about the jaw-dropping promo that Phoenix announced the night before: P10 per liter for all its fuels yesterday.
There was a slight catch though. The discounts were in effect only from 10 a.m. to 12 noon at selected Phoenix gas stations — 76 out of its 515 outlets nationwide, to be exact.
We’re talking about 20 stations in Mindanao (eight in Davao), 20 in the Visayas and 36 in Luzon, including 18 in Metro Manila.
We’re not sure how it went across the nation, but the results in the metropolis were predictable: vehicular traffic mayhem around Phoenix’ 18 gas stations in Metro Manila, as motorists queued to get to the pumps within the promo period.
In any case, motorists who were lucky enough to gas up during the two-hour discount window weren’t complaining.
Not when you’ll pay only 25 percent (at least) of what you’d normally shell out for a full tank of gas.
Now that authorities understand the potential of cheap petroleum for causing traffic mayhem, perhaps future promos should be better coordinated with local government units. Carry on. —DAXIM L. LUCAS
Duterte in PSE
Everyone knows that President Duterte has a different body clock. So when he visited the Philippine Stock Exchange (PSE) for the first time, it was supposed to be for the closing bell rather than the usual opening bell-ringing ceremonies that his predecessors usually graced.
The PSE Center in Makati was literally swarmed with more people than the usual. Deployment of security personnel/police was unusually heavy within the perimeter.
But what’s more telling is why Mr. Duterte visited the abode of the oligarchs and their minions for the first time since becoming President. He was there to grace the 10th year PSE listing anniversary of Phoenix Petroleum, the company led by his fellow Davaoeño, Dennis Uy, said to be the businessman to watch in the years ahead.
Uy is also president of leading logistics provider 2GO Group Inc., which perplexed many investors with the restatement of its latest financial reports that put into question the accounting practices of previous management.
He is also president and founder of Chelsea Logistics, which is applying for an P8-billion initial public offering, whose securities registration was incidentally approved by the Securities and Exchange Commission yesterday. Chelsea Logistics was authorized to sell up to 546.59 million common shares for up to P14.63 per share.
Mr. Duterte, however, didn’t make it to the PSE’s 3:30 p.m. closing bell ringing ceremony and this was not something that the PSE could hold off. So in deference to the CEO of the land, the PSE held another ceremony for the listing anniversary of Phoenix when he arrived at 4:48 pm. On this occasion, Uy pledged to donate P100 million to help Filipino soldiers, especially those fighting the extremists in Marawi.
Back to Mr. Duterte, for as long as he won’t be late in delivering the “golden age of infrastructure,” the private sector won’t mind.—DORIS DUMLAO-ABADILLA