December 23, 2019 | 7:00 pm [ bworldonline.com ]
ROXAS and Co., Inc. (RCI) said its subsidiary in the hospitality business is selling its hotel in Cubao, and relocating “to a more strategic location” in a move aimed at improving the company’s finances.
“Proceeds from the sale of Cubao (property) of about P411 million will be used to improve existing sites and lower the subsidiary’s outstanding debt until a new site has been identified,” the listed company told the stock exchange on Monday.
RCI said the decision by its unit Roxaco-Asia Hospitality Corp. (RAHC) was part of “continuing objective of improving net income and reducing the group’s overall debt.”
RAHC operates five budget hotels under the Go Hotel franchise.
Separately, RCI disclosed that it had sold more treasury shares, bringing the total sold so far at 37,486,989 out of the 933,703,514 shares authorized for sale. The board approved in 2014 the continuous sale of treasury shares as a fundraising initiative for working capital and expansion projects.
Based on the company’s quarterly financial report, it incurred a net loss of P102.37 million in the third quarter, or lower than the P113.08 million recorded in the same period last year.
During the same period, it managed to post nearly a 90% rise in gross revenues to P208.55 million. Hotel revenues contributed more than half of the company’s top-line figure in the third quarter.
RCI has short-term and long-term loans amounting to P1.30 billion and P2.75 billion, respectively, which it used for working capital and to fund real estate, hotel and coconut projects.
As of the third quarter, the company said its debt-to-equity ratio slightly increased to 0.64:1 from 0.61:1 in December 2018. It said the latest ratio was still within the 0.75:1 ratio limit required by banks for term loans.
To improve its liquidity and debt-to-equity ratio, it started to sell several of its assets and investments with the proceeds used to reduce debt. It has also refinanced about P450 million of its outstanding long-term debts with new term loans having longer repayment terms and with two-year grace periods before repayment. It secured new short-term credit lines with banks to support operations.
RAHC is the former Roxaco-Vanguard Hotels Corp., which changed its name in October 2018. Its hotel management subsidiary looks after all its five Go Hotels and the premium Anya Hotel and Resorts Tagaytay, which began full-year commercial operations in 2018 with 80 hotel suites, premium restaurants, heated pools, a library, function rooms, events venues and lounges.
On Monday, shares in RCI rose by 0.47% to P2.15 each. — Victor V. Saulon
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