The bond issuance is aimed a further reducing Uniwide’s debt to more manageable levels and regaining the firm’s status as one of the country’s largest discount retail firms.
Under the plan, Uniwide will settle its P2.59-billion obligations to unsecured creditors through the conversion of 50 percent of the unsecured debt into 15-year convertible notes redeemable anytime at Uniwide’s option.
The other half of the unsecured debt will be restructured into a 10-year loan with zero interest, a grace period of three years and whose principal payment will start only on the fourth year. The restructured debt will be paid from the cash flow from the company’s retail operations.
The bulk of the total unsecured debt of P2.59 billion is held by trade suppliers. Other unsecured creditors include contractors with a loan exposure of P407.91 million; lenders (P99.75 million); Coastal Mall tenants (P85.3 million); and non-trade suppliers (P327.46 million).
On its secured debt, Uniwide is presently negotiating with investors from Hong Kong for the operation of Coastal Mall (Manila Bay). The company is looking at a fresh infusion of P700,000 which will be used to pay off creditor-banks.
Since the remaining lease period of the Coastal Mall is 11 years, the investor is expected to renovate the area as soon as the agreement is executed.
Uniwide has a total secured debt of P3.68 billion which the company hopes to settle through dacion-en-pago arrangements or payment-in-kind scheme.
Of its creditor-banks, however, Philippine National Bank, Allied Bank and Bank of the Philippine Islands have pending motions to alter the proposed dacion-en-pago scheme.
The amended plan focuses on the dacion-en-pago of the group’s secured creditors and the settlement of unsecured debts through the cash flow of Uniwide’s retail operations.
The assets of the Uniwide group, as well as personal properties of the controlling Gow family which are being held by creditors as security to their loan, will be used to settle the company’s outstanding debt.
The dacion of properties to the creditors shall be executed either via direct transfer or the formation of special-purpose vehicle companies.
The Uniwide group suffered from liquidity problems as a result of the economic crunch and failed diversification. It filed for the suspension of debt payments and rehabilitation with the SEC in June 1999.
The group is composed of Uniwide Sales Inc., Uniwide Holdings Inc., Naic Resources & Development Corp., Uniwide Sales Realty & Resources Corp., First Paragon Corp. and Uniwide Sales Warehouse Club Inc.