The Philippine Star

BDO gives Den­nis Uy dead­line to im­prove Phoenix debt ra­tios

- Heard through the grapevine VIC­TOR C. AGUSTIN

BDO has given Den­nis Uy up to June 30 to im­prove the de­te­ri­o­rat­ing debt ra­tios of his Phoenix Pe­tro­leum, de­spite the SM Group be­ing a strate­gic part­ner of the coun­try’s new­est taipan in his 2GO ship­ping and lo­gis­tics firm.

Ac­cord­ing to reg­u­la­tory dis­clo­sures, Phoenix Pe­tro­leum last year breached the fi­nan­cial covenant with BDO in re­la­tion to the P6 bil­lion, seven-year loan that the oil com­pany ob­tained in 2017 as well as for an­other P300 mil­lion loan that BDO had granted in 2014.

Phoenix Pe­tro­leum re­ported that it had al­ready “re­ceived ap­proval (from BDO) on the waiver of breach in the cur­rent ra­tio re­quire­ment, sub­ject to the con­di­tion that such breach is reme­died by June 30, 2020 to be tested on or be­fore Aug. 31, 2020.”

As to the P300 mil­lion loan, which went to fi­nance the pur­chase of an oil tanker, “man­age­ment plans to fully pay the loan in 2020,” Phoenix said.

The same covenant breach was also re­ported by Uy’s Chelsea Lo­gis­tics in the af­ter­math of its P1.1-bil­lion loan from four other banks in 2017 mainly to ac­quire the pas­sen­ger ferry line, Trans-Asia Ship­ping.

Both Chelsea and Trans-Asia had al­ready re­quested for the waiver of the fi­nan­cial covenants “and man­age­ment is con­fi­dent that such will be ap­proved based on the pre­lim­i­nary dis­cus­sions with the lender banks.”

Ac­cord­ing to reg­u­la­tory dis­clo­sures, the two com­pa­nies last year paid P570 mil­lion in in­ter­est alone to the cred­i­tor con­sor­tium.

Chelsea and Trans-Asia said they have been up to date in their ser­vic­ing of the loans and had not re­ceived any writ­ten no­tice as of the first quar­ter of 2020 that the loans were due and de­mand­able.

As of end-2019, Phoenix Pe­tro­leum’s term loans from 14 banks and one in­vest­ment house grew to P43.68 bil­lion from P36.85 bil­lion in 2018.

Of the P43.68 bil­lion, BDO held P9.48 bil­lion, of which P7.48 bil­lion are payable in five to seven years with in­ter­est rates from 5.38 per­cent to 5.71 per­cent. The bal­ance of P2 bil­lion are in the form of one to three months notes fa­cil­ity agree­ments with in­ter­est rates of 5.5 to six per­cent.

The big­gest chunk, P11.47 bil­lion, was be­ing held by the Multi­na­tional In­vest­ment Ban­cor­po­ra­tion on be­half of note­hold­ers, mainly in notes payable in two-to-six months with in­ter­est rates of 4.25 to 6.75 per­cent.

De­spite Phoenix Pe­tro­leum’s weak­ened debt ser­vice ra­tios, Uy was able to is­sue last year P10 bil­lion short-term com­mer­cial papers. That is­suance, with PNB Cap­i­tal and In­vest­ment Corp. as the sole is­sue man­ager, lead un­der­writer, and sole bookrun­ner, was in­ci­den­tally voted as the best deal of 2019 at the Asian Bank­ing and Fi­nance Awards in Sin­ga­pore.

And with the on­go­ing coro­n­avirus pan­demic chok­ing the econ­omy, the gung-ho son of Davao is ap­par­ently still on track with his am­bi­tious lever­aged ex­pan­sion.

Uy is now seek­ing ap­proval from Phoenix Pe­tro­leum share­hold­ers to in­vest P4.9 bil­lion of cor­po­rate funds in its wholly-owned real es­tate sub­sidiary, Duta, for­merly a Malaysian-Filipino ven­ture rep­re­sented by now Phoenix in­de­pen­dent direc­tor Ni­ca­sio Al­can­tara.

There is ap­par­ently good rea­son why Robin­sons Re­tail kap­i­tana Robina Gokong­wei is still def­er­en­tial to Rus­tan’s chair­man Ze­naida Tan­toco de­spite Robin­sons hav­ing ac­quired the Rus­tan’s su­per­mar­ket chain lock­stock-and-bar­rel from the Tan­toco clan.

Robin­sons is still pay­ing royalty to the Tan­to­cos for the con­tin­ued use of Rus­tan’s name.

The royalty fee amounts to 0.5 per­cent on net sales of any su­per­mar­ket that is still named Rus­tan’s, like the main branch in Glo­ri­etta, and has not yet switched brand­ing to Well­come, the Hong Kong-based chain whose Philip­pine op­er­a­tions have been folded un­der Robin­sons.

For 2019, that royalty fee to Rus­tan’s still amounted to P15.7 mil­lion.

E-mail: mon­ey­gor­ound.manila@ya­hoo.com

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