The Philippine Star
BDO gives Dennis Uy deadline to improve Phoenix debt ratios
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.