U City: Boosting the Liquidity

Following the divorce with Sansiri Public Company Limited (SIRI), U City Public Company Limited (U) made another surprise news after disposing of 39 assets at once. 

 

At the end of November, U announced the disposal of ordinary shares in 9 joint venture companies, in which jointly invested between U and SIRI, to SIRI in the total amount of 1,547.19 million baht, at the same time, U acquired 2 joint venture companies in the total amount of 1,188.2 million baht.

 

Later on December 15, U approved the disposal of 39 assets including freehold plots, real estate companies, office buildings, offshore hotels and joint venture companies (i.e. BTS Sansiri Holding Twenty One Co., Ltd. and BTS Sansiri Holding Thirteen Co., Ltd. that recently acquired from SIRI) at a total selling price of 3,827 million baht. 

 

Prompting a question regarding U’s finance. Tycoon Keeree Kanjanapas, what happened to your company..?

 

The disposal statement said that the outbreak of the COVID-19 virus has had a significant negative impact on U’s financial position as of the end of September, net loss was 2,770 million baht compared to a total revenue of 3,688 million baht. Cash and cash equivalents was 1,545 million baht, while current portion of long-term liabilities was 3,506 million baht. 

 

With those financing losses, the disposal of assets might be the reason as an afford to lessen a lack of U’s liquidity. 

 

Moreover, most selling assets have yet to conduct or operate any business, meanwhile the overseas hotels are currently affected by the pandemic, disposing of the said 39 assets might reduce U’s expenses, along with boosting Company’s liquidity. 

 

However, having viewed that this disposal transaction will cause U to recognize an accounting loss in the amount of 4,170 million baht as hotel is an impaired asset and now facing less clients amid the pandemic. 

 

But why didn’t U ask for help from mommy..? Well… the parent company BTS Group Holdings Public Company Limited (BTS) is also in a difficult situation due to a ton of construction projects that require a huge amount of money such as the MRT Yellow Line and Pink Line.

 

In addition, BTS has a hundred billion project U-tapao Airport and Eastern Airport City Project that BBS Consortium (consists of BTS, Bangkok Airways Public Company Limited (BA) and Sino-Thai Engineering and Construction Public Company Limited (STEC)) has won the nearly-300-billion-baht bidding.