Dennis Uy avoids default after payment of Clark project debt
MANILA, Philippines — Udenna Corp., the holding company of Davao-based businessman Dennis Uy, said Monday, July 25, that it has settled the debt it incurred for its Clark project ahead of deadline, avoiding the possibility of a massive default.
In a statement, Udenna said it paid its debt “to the satisfaction of the majority lender and the consortium banks.”
Over the weekend, Udenna confirmed that it received a notice of declaration of default from a group of banks led by BDO Unibank Inc., which has the biggest exposure to the company. The development was first reported by The Philippine Daily Inquirer.
The notice from BDO gives Udenna until July 26, Tuesday, to pay. It was sent to Uy in connection with failed lease payments to state-run Clark International Airport Corp. (CIAC) by Global Gateway Development Corp. (GGDC), a subsidiary of Udenna that’s building a business hub on a former American military base located north of the capital region.
The amount due was only about P225 million. But should Udenna fail to pay one of its debts on time, the Inquirer reported that “cross default” provisions present in the company’s loan contracts with banks could trigger a slew of defaults on all its other loans, even those that the company is settling on schedule. Udenna’s liabilities have reportedly reached P254 billion as of last year.
“We at Udenna remain steadfast in our commitments and our investments,” the company said.
Uy shares fall
Shares in Uy’s listed firms were in the red during the morning trade. As of 10:30 a.m., Uy’s shipping firm, Chelsea Logistics and Infrastructure Corp., lost 13.39% while DITO CME Holdings Corp., the parent firm of his telco venture Dito Telecommunity,, was trading down 7.35%.
The businessman’s oil company, Phoenix Petroleum Philippines, tanked 8.90%. Meanwhile, PH Resorts Group Holdings Inc., which manages Uy’s gaming and hospitality units, fell 6.25%.
“Based on observations, the market's reaction reflects uncertainty towards firms led by Dennis Uy. Why so? Because the foreclosure notice wasn't given by just any consortium. It's from the consortium led by the largest UKB (Universal and Commercial Bank) in terms of asset-size, BDO,” Arielle Santos, equity analyst at Regina Capital, said.
Uy’s group was too leveraged when it faced a pandemic that tarnished the balance sheets of many of his businesses. The financial troubles prompted him to sell his controlling stake in shipper 2GO to the SM Group and some assets of Phoenix Petroleum in 2021.
Just recently, Uy, whose debt-fueled business expansion coincided with the rise to power of his friend, former President Rodrigo Duterte, sold some of his shares in his casino businesses in Cebu and Clark to ports and gaming tycoon Enrique Razon Jr., who is also set to acquire a controlling stake in Uy's Malampaya gas-to-power project.
Apart from the Malampaya project, Uy is reportedly planning more divestments, with Razon being the preferred buyer for one more major asset: the Clark Global City.
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