Udenna denies default claim
It could also be the most expansive corporate default in the history of the Philippine business
Udenna Corporation confirmed that it received a Notice of Declaration of Default from the consortium of banks led by the BDO Unibank Inc. but denied claims it is on the brink of default.
The Dennis Uy-led company clarified that there is no Event of Default to the Master Lease Agreement between Clark Global City Corp. (CGCC) or Clark International Airport Corporation (CIAC).
“Last night, 22 July, we received a Notice of Declaration of Default from a consortium of banks against CGCC on the grounds of “continuing and irremediable Events of Default” concerning the Master Lease Agreement between CIAC and GGDC,” the company said in a statement sent to the press by Udenna Group spokesperson Raymond Zorilla.
Zorilla was reacting to reports that BDO is leading an initiative of several CGCC creditors to foreclose on the loan collateral of Uy. If the move pushes through, Uy could join the growing list of glocal corporations to default on their loans.
It could also be the most expansive corporate default in the history of the Philippine business.
Uy emerged as an obscure businessman from Davao City after President Rodrigo Duterte won in 2016 and went on a spending binge, with its flagship Udenna Corporation acquiring marquee assets, including the controlling stake in the Malampaya deep-water gas-to-power project, the country’s largest gas field, Phoenix Petroleum, among others.
He bought the 177-hectare CGCC from a Kuwait Group using a 10-year loan headed by BDO, with interest between 7.61 percent and 8.98 percent. Uy is the biggest single creditor of BDO, Philippine National Bank, and Bank of China-Grand Cayman Branch (BoC-GC), with an accumulated P34 billion loan, data from the Securities and Exchange Commission showed.
At least 21 local and foreign banks provided financial muscle to Uy’s spending spree for mergers and takeovers. Since 2017, his total debt has tripled to P85 billion as of 2020.
Here are Uy’s outstanding obligations in the first two years of the Duterte administration: BDO — P13.111 billion, Bank of China — P5.452 billion, China Banking Corp. P3.814 billion, Philippine National Bank P3.125 billion, Philippine Business Bank — P2.526, billion, Multinational Investment Bancorporation — P2.385 billion, Development Bank of the Philippines P1.906 billion, Land Bank of the Philippines P1.9 billion, Robinsons Bank Corp. — P1.268 billion, Rizal Commercial Banking Corp. — P1 billion, Philippine Veterans Bank — P600 million, Bank of Commerce — P500 million, United Coconut Planters Bank, Asia United Bank — P493 million, Pentacapital Investment Corp. — P400 million, Union Bank of the Philippines — P300 million, Taiwan’s CTBC Bank (Philippines) Corp. — P296.25 million, Taiwan’s Mega International Commercial Bank Co. — P296 million, Taiwan’s ‘First Commercial Bank, Ltd. — P197.5 million, and Philippine Bank of Communications — P25.699 million.
According to the report, the Davao — based businessman was given until 26 July by BDO to respond favorably to the notice or face foreclosure.
Udenna assured that Global Gateway Development Corporation (GGDC) and CIAC would work on an amicable resolution that would not violate Master Lease Agreement.
“In contention, we replied to the consortium banks to dispute their conclusion and clarified that, under the circumstances, there has been, in fact, no Event of Default or, at the very least, no irremediable Event of Default under the Master Lease Agreement on the part of CGCC or GGDC,” Zorilla added.