SEC expected to approve new Uniwide rehab plan

The Securities and Exchange Commission (SEC) is likely to approve the amended rehabilitation plan of the Uniwide Group of Companies as most of the creditor-banks have reportedly agreed to a dacion en pago settlement of nearly P13 billion in debts.

SEC Chairman Lilia Bautista said the Commission will decide on Uniwide’s rehabilitation plan submitted by its receiver team led by former SEC Associate Commissioner Monico Jacob last October.

She said with the exception of one bank, most of Uniwide’s secured bank creditors have consented to a dacion en pago arrangement to pave the way for its rehabilitation and stave of liquidation as earlier contemplated by the SEC.

Under the rehabilitation plan, the assets of the Uniwide Group, as well as personal, properties of the Gow family which are being held by creditors as security to their loan will be used to settle the outstanding debts of the Uniwide Group.

"The rehabilitation plan includes the dacion of assets to the Uniwide Group’s secured creditors and the settlement to its unsecured creditors through the cash flow of the retail operations," Jacob said.

Among the properties to be given up are three operating stores (Cabuyao, Libis and Avenida), two malls (Metromall and Coastal Mall), two future store sites (Cubao and Iloilo), commercial and residential lots in Cavite and Laguna, as well as commercial lots/properties in Caloocan, Parañaque, Pasig, Quezon City, Gen. Santos City, Malolos and Iloilo.

Jacob said that since the Gow family will continue to manage the core retail business whose cash flow will be used to pay off the unsecured creditors (trade suppliers, contractors, private lenders and non-trade creditors), the rehabilitation plan will require a leaseback arrangement for operating assets already in dacion – the two malls, the Avenida store and the Ingasco, Caloocan property – for at least 10 years.

"The leaseback is critical to the success of the plan for the continuous operation for at least seven stores to generate sufficient cash to service the debts to trade suppliers and other unsecured creditors after the dacion of nearly all assets of the Uniwide Group," Jacob said.

Uniwide owes around P2.537 billion to its unsecured creditors. But instead of outright cash payment, Uniwide said 50 percent of the unsecured loans will be first converted into 15-year convertible notes redeemable any time at its option. The balance of 50 percent will be paid within 10 years, inclusive of a three-year grace period, from the cash from retail operations.

The company said that despite the financial difficulties it has encountered since 1998, the retail business consisting of eight warehouse clubs and two department stores continue in full operations. From its peak sales level of P14.5 billion in 1997, the retail arm Uniwide Sales Warehouse Club Inc. (USWCI) subsequently declined as its liquidity problems affected stock inventory. In 2000, sales dropped to P4.3 billion due to the slowdown in purchases and sale of merchandise in bulk at lower prices in preparation for the entry of France’s Casino Guichard-Perrachon, the ertswhile investor of Uniwide.

This year, USWCI is expected to post higher sales of P5 billion as the company has trimmed its operating expenses and broadened its inventory mix to increase non-supermarket products which provide higher margins.