DITO CME [DITO 2.35 4.0%; 139% avgVol] [link] said its subsidiary, DITO Telecommunity (DitoTel), received a bridge loan renewal from the Bank of China and China Minsheng Banking Corporation.
DITO said that the bridge loan will be “repaid and absorbed” into a larger $3.9 billion project financing loan that it is attempting to finalize and close before the end of 2023.
MB BOTTOM-LINE
For those who are unfamiliar, a bridge loan is a short-term loan that is given to help a company “bridge the gap” between its current situation and the signing of a longer-term loan.
Here, DITO has been working on the larger part of this deal (the long-term loan) for a long time, and while DITO’s shareholders will be relieved to see DITO making a deal with one of its largest lender (Bank of China), it won’t mean much unless the larger deal is closed.
A lot has changed in the time that DITO’s management has been working on this deal, and DITO has continued to burn cash trying to expand its capex-heavy and low-margin business, so a bridge loan like this will give DITO breathing room (working capital) to maintain its growth pace without having to make tactical sacrifices to keep the lights on or make payroll.
--