French retail giant buys Uniwide firm for P3.6 B

The French retail giant, Casino Guichard-Perrachon will pay P3.57 billion in cash for 89.2 percent of Uniwide Sales Warehouse Club Inc. (USWCI), the retail arm of the cash-strapped Uniwide group of companies.

In a disclosure to the Securities and Exchange Commission (SEC), Uniwide said that with the fresh equity infusion, together with the dacion en pago arrangements with the creditor banks, Uniwide will be able to settle a substantial portion of its obligations.

The Casino Group and UHI signed a memorandum of understanding (MOU) for the sale of the warehouse clubs which will be finalized by June this year.

The sale is part of the rehabilitation plan for Uniwide. A majority of its creditor banks has already agreed in principle to the dacion en pago or payment in kind arrangement, and negotiations are currently centered on valuation issues.

Recently Uniwide signed a memorandum of agreement (MOA) with two of its creditors, the United Coconut Planters Bank and East Asia Capital. Two other banks are currently preparing their MOA for signing within the next two weeks.

The Casino Group, aside from upgrading the existing Warehouse Club stores, will also construct and operate five additional Warehouse Club stores in the next few years. The properties have already been identified. The new investors will also raise working capital and capital expenditure related to the refurbishing and upgrading of all existing stores.

Prior to the target closing date, Uniwide has to comply with all the conditions spelled out in the MOU.

The Uniwide receiver group said the investment of the Casino Group will save about 4,000 direct jobs, more than 2,000 suppliers will resume business stalled by problems of Uniwide, while more than 2000,000 workers of suppliers will regain employment.

There are 10 Warehouse Club stores nationwide and five distribution centers. The combined sales of these stores from July-December 1999, reached P2.41 billion and P5.35 billion for the entire year.

Uniwide has piled up debts of about P12 billion, a result of an all-timed expansion and a failed diversification program.