Chelsea-Trans-Asia deal gets green light

CEBU, Philippines — Chelsea Logistics Holdings Corp.'s acquisition of P2-million common shares in Cebu-based Trans-Asia Shipping Lines is a go after the Philippine Competition Commission resolved not to take further action on the deal.

In a disclosure to the Philippine Stock Exchange yesterday, the shipping firm said it submitted conditions for the acquisition to the antitrust body.

Among the conditions include price monitoring on passenger and cargo rates, the submission of semi-annual reports on all trips and services, maintenance of service quality and explanation of all extraordinary rates increases in the critical routes, the company noted.

"In its decision dated 11 January 2019, the Philippine Competition Commission resolved that it will not take further action on the acquisition by Chelsea Logistics Holdings Corp. of 2,000,000 common shares of Trans-Asia Shipping Lines Inc. on the basis of the conditions provided in the undertaking submitted by the company," Chelsea said.

It was July last year when the PCC had voided Chelsea's acquisition of Trans-Asia in 2016.

The PCC had said the acquisition "failed to secure" what is allegedly the required approval of the antitrust watchdog.

Chelsea and the sellers of the Cebu shipping firm were convinced the PCC should reconsider its "unfair decision".

At the time of Chelsea’s acquisition of Trans-Asia, PCC had a size of transaction threshold of P1 billion for compulsory notification. The PCC ruled that Chelsea should have notified the commission because Trans-Asia then had assets of P1.1 billion, a little over the threshold.

Chelsea and the former owners of Trans-Asia disagreed, saying the notification to the commission is not required since Trans-Asia’s net asset value (NAV) at the time of the sale was way below the PCC's P1 billion threshold.

The parties argue the basis for the P1 billion size of transaction threshold should be computed based on “net assets”.

It can be recalled that PCC raised early last year its own size of transaction threshold to P2 billion citing that transactions below this amount will not likely raise competition issues.