Duped

The tens of thousands of passengers stranded daily at the Coastal Mall because of the absence of forward connections must be wondering why there is this large structure in such a forsaken place. The ghost of a mall is now used as some hastily refurbished bus terminal to intercept provincial buses coming in from Cavite and Batangas so that they do not add to the chaos of the city’s streets.

That forsaken mall seemingly sitting in the middle of nowhere is an interesting story on its own. It is a monument to the nation’s economic rollercoaster ride the past two decades. It is also a warning against being too trusting.

Businessman Jimmy Gow of the Uniwide Group was convinced to build that mall by his erstwhile partner Jacinto Ng Sr.  Ng headed up the Manila Bay Development Corporation (MBDC) that owned that swathe of reclaimed land.

MBDC envisioned a large commercial development in the area, comparable to the Greenhills Shopping Center in Ortigas. The Uniwide mall will be at the center of it all, a bustling new city basically.

Gow was happy to be part of this development and leased 20 hectares of land from MBTC. He invested a large sum building an impressive mall to anchor MBTC’s envisioned commercial center.

MBTC, possibly due to financing problems, never realized the commercial center, leaving the mall standing in isolation for many years. The envisioned commercial center was soon overtaken, and then overshadowed, by the Sy-led Mall of Asia complex nearby. The project will soon be dwarfed by the rapidly rising Entertainment City, a visionary undertaking of former Pagcor Chairman Ephraim Genuino.

The construction of the Coastal Mall was undertaken through large borrowing by the Gow group. Away from consumer traffic, it was a challenge to make this investment turn in a profit. When the 1997 Asian financial crisis hit us, the Gow group saw their debt inflate as the peso collapsed. That compounded the operational losses of the mall due to the delay in the development of the rest of the envisioned commercial area.

This was just the beginning of a long string of heartaches for the Uniwide group, once the rising star in Philippine retail.

Just as the going got rough, MBDC abruptly decided to reduce the area leased to Uniwide from 20 hectares to only 10. Uniwide had to return some P400 in investments from friends who planned to locate around the mall.

Later, the reason would be evident. Macapagal Boulevard was to be built, running through the property MBDC had agreed to lease to Uniwide. The property now had greater value for MBDC; but Uniwide was left flailing with its own financial difficulties.

The Gow group believes there was a conspiracy between some of its executives and the MBDC. These executives squandered some P2.1 billion of the funds raised from an initial public offering when they proceeded with the construction of the mall without parallel developments on the part of MBDC.  They likewise paid MBDC an additional P381 million in “unnecessary” rentals.

These executives also signed a contract with MBDC that contained provisions inimical to the interests of Uniwide. The Gow group has sued them for it.

Faced with serious cash flow problems, employees of the Uniwide group subscribed to shares offered by the corporation with their own hard-earned money to keep the business alive. That, however, could not prevent the corporation from being taken over by the Securities and Exchange Commission for rehabilitation.

Fate has not been kind to Jimmy Gow.

In 1996, before the Asian financial crisis broke out, Uniwide Holdings was able to raise P4 billion by way of an initial public offering of stocks. It had 11 supermarkets and department stores plus 42 convenience outlets throughout the metropolitan area. The corporation directly employed 3,000 workers and indirectly provided jobs for 15,000 more.

It is the SEC that put the final chapter to this very sad tale. Although Uniwide claims it had a reliable recovery plan to put its operations back to profitability, the special hearing panel of the SEC decided to divide up the remaining assets and turn them over to creditors.

Uniwide again turns to the courts to fight the cannibalization of the company. In 2002, Uniwide and the SEC agreed to a 15-year rehabilitation plan. In 2010, halfway through that program, Uniwide repaid 80% of its outstanding debt. Only P1.3 billion remained of the original P7.525B debt. The company had the assets to back up the remaining portion of its debt.

Just halfway through the agreed 15-year rehabilitation plan, Uniwide began negotiations to move out of receivership. The SEC overtook that by ruling on the liquidation of Uniwide.

A whole hoard of cases now sits in the courts relating to Uniwide and the people the company had chosen to work with. It will take many years to settle all these cases, all the claims and the counterclaims. Uniwide argues it was duped by its own partners and associates. The company will not walk peacefully into the night.

Meanwhile, that ghost of a mall on reclaimed land stands as a reminder that the best-organized of businesses could quickly turn sour, either due to unforeseen global risks (such as currency volatility), the ill-motive of erstwhile partners or the irresponsibility of its own trusted employees.

The unique misfortune of Uniwide, unlike those other sturdy Filipino companies that survived the crisis and then thrived, is everything that could possibly go wrong went wrong. If this company manages to wade through the thicket of judicial proceedings, that will be the outcome of sheer determination.