Uniwide investors seek return of investments

MANILA, Philippines - Hundreds of small investors of the foreclosed Uniwide Group are running after the Manila Bay Development Corp. (MBDC) for their lost investments.

Over 500 investors led by Brenelie Rualo who bought shares during Uniwide’s initial public offering (IPO) in 1996 have sought compensation from the firm owned by Jacinto Ng Sr. for what they alleged were “badges of fraud” that led to the downfall of Uniwide, particularly the firm’s Coastal Mall in Parañaque City.

Rualo told reporters in Manila that they are seeking from MBDC the refund of P381 million in rentals paid by Coastal Mall and additional P100 million in damages due to its supposedly highly anomalous contract with Uniwide 20 years ago.

MBDC owns 40 hectares of reclamation property at the border of Roxas Boulevard and Coastal Road, of which Jimmy Gow’s Uniwide leased a 20-hectare portion in 1993 for what would become the Coastal Mall.

Rualo explained there were “iniquitous” provisions in the lease agreement that should be blamed for the “hemorrhage” of an estimated P2.1 billion by 2005 in Uniwide’s coffers – an amount more than half the P4 billion that some 15,000 investors had placed on the retail sales firm during the IPO.

The amount was based on the P381 million rentals paid until 2005 and the Coastal Mall’s estimated construction cost of P1.7 billion.

First, the group questioned why Uniwide’s property was reduced to half or just 10 hectares to give way to construction of Diosdado Macapagal Blvd. that cut the income of Coastal Mall.

They said it “required a change of plan and reduction in the return of investments (ROI) of lessees and stallholders in the amount of P400 million.”

Rualo’s group also assailed the absence of a renewal clause giving Uniwide the option to extend the lease at the end of the original 20-year contract so it can recover the investment.

They lamented that the contract also did not provide for a payment moratorium during the construction phase, which compelled the lessee to pay rentals in full even during the first two years of the lease when Coastal Mall was being built from 1997 to 1998.

Lastly, they questioned MBDC’s move to evict Coastal Mall when Uniwide was asking for more lenient lease terms – payments based on original monthly rentals minus the stipulated yearly increases and air rights fees – as a result of Ng’s failure to build a commercial center in that area as originally planned.

They said these were the reasons for the bankruptcy of Uniwide, which at its prime had annual sales of P20 billion.

Rualo has also accused the former Uniwide chief finance officer Jimmy Cabangis (whose annual salary was P5 million) and former controller-treasurer Cora Rey of conspiring with MBDC in perpetrating the badges of fraud that led to the retail chain’s financial woes and receivership

Cabangis and Rey resigned, respectively, in 2003 and 2004.

“The fraudulent acts couldn’t have taken place without the complicity of MBDC, the chief finance and the controller of Uniwide,” the group said.

“We were ordinary employees who dreamed of retiring early in life by saving whatever was with our small salaries to invest in the shares of stock of the Uniwide when it made a public offering,” Rualo recalled.

They lamented how this MBDC-induced financial “hemorrhage” was exacerbated by the financial crisis that swept across Asia in 1997, forcing the retail chain to default on its debt payments and eventually ask the Securities and Exchange Commission to go under receivership and a SEC-supervised long-term rehabilitation program.

Rualo’s group said they have already filed their derivate suit for damages through lawyer Tomas Caspe last July 31 before the Parañaque City Regional Trial Court Branch 258.