PILIPINAS SHELL Petroleum Corp. has entered into a P9-billion medium-term loan agreement with Bank of the Philippine Islands, the company told the stock exchange on Wednesday.
Pilipinas Shell said it obtained the loan “to avail of lower interest rates and refinance existing loans.” The company noted its gearing ratio will remain the same.
Based on the company’s financial report as of the third quarter of 2017, its gearing ratio was at 22%, down from 27% as of December 2016.
Gearing ratio is a measure of the company’s financial leverage reflecting the degree to which its operations are financed by debt. It said the amount of debt that the company will commit depends on cash inflow from operations, divestment proceeds and cash outflow in the form of capital investment, dividend payments and share repurchases.
Pilipinas Shell said it aims to maintain an efficient statement of financial position to be able to finance investment and growth, after the funding of dividends.
The gearing ratio is calculated as net debt divided by total capital. Net debt is derived from total loans and borrowings less cash and cash equivalents. — Victor V. Saulon