Dennis Uy’s Udenna eyes ‘amicable resolution’ to Clark project debt woes

Davao-based businessman Dennis A. Uy’s Udenna Corp. is moving to settle debt issues involving  its $6-billion Clark Global City project after receiving a foreclosure notice from a consortium of banks led by BDO Unibank Inc., the country’s biggest lender.

On Saturday, the unlisted holding company of Uy confirmed an Inquirer report that it received a notice of declaration of default on July 22, adding that it was contesting the findings.

Udenna said the default notice was issued against subsidiary Clark Global City Corp., which is developing the 177-hectare Clark Global City in the Clark Freeport Zone in Pampanga.

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Udenna, citing the default notice, said this involved “continuing and irremediable events of default” in relation to long-term lease agreement between state-run Clark International Airport Corp.  (CIAC) and Global Gateway Development Corp. (GGDC).

GGDC holds the leasehold rights to the property complex. It was acquired by Clark Global City Corp. in 2017.

“GGDC and CIAC are working on an amicable resolution that will not result in any violation under the master lease agreement,” Udenna said in the statement.

Meanwhile, the company said it had replied to the banks to “dispute their conclusion” which triggered the default declaration.

“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,” Udenna said.

The issue involved the failure of Uy’s companies to make payments to CIAC. The Inquirer reported the current debt stood at $4 million (P225 million) but banking sources also raised concerns over ballooning liabilities that could be trigged by so-called cross-default provisions.

Udenna’s liabilities at the end of 2020 stood at more than P254 billon against total assets of P310.34 billion, a regulatory filing showed.

Losses for the year more than doubled to P8.6 billion given the business downturn caused by the  COVID-19 pandemic.

A campaign supporter of President Duterte, Uy moved to rapidly expand his business empire over the past six years, mainly through acquisitions funded by borrowings.  BDO, which is part of the Sy family’s SM Investments Corp., was one of Uy’s biggest lenders.

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Toward the end of President Duterte’s term, Uy has been selling key assets. These include logistics firm 2GO Group Inc. to SM Group last year and the Malampaya deepwater gas-to-power project to billionaire Enrique Razon Jr. last month.

Uy also sold stakes in his Cebu and Pampanga casino-hotel projects to Razon last May. Uy’s other companies include listed firms Phoenix Petroleum Philippines, Chelsea Logistics and Infrastructure Holdings Corp. and DITO CME Holdings, which owns the group’s telecommunications venture with China Telecom.

Early this year, DITO CME said its telco unit was in talks with Chinese and other foreign banks to finance its network expansion.

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The article was originally published in Inquirer.NET and written by Miguel R. Camus.

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