Casino shelving raises doubts on Udenna’s financial capacity

MANILA, Philippines — A lawmaker has questioned anew the financial capacity of businessman Dennis Uy to acquire the stake of Shell Philippines Exploration B.V. (SPEX) in the Malampaya gas field after he suspended his casino project in Clark due to debt and cash problems.

The acquisition by Udenna Corp. of Shell’s 45 percent stake in Service Contract (SC) 38 – the service contract covering the Malampaya gas field – is under review by the government.

“This is a red flag. Paano natin mapagkakatiwalaan ang kumpanyang lubog sa utang (How can we trust an indebted company)? First, the acquisition of Udenna Corp. unit of Chevron’s 45 percent stake in Malampaya was largely financed by loans. Now, Udenna wants to have the operating interests by acquiring Shell’s stake,” Sen. Sherwin Gatchalian said in a statement.

Gatchalian, who chairs the Senate committee on energy, stressed the need to scrutinize the transaction since “Malampaya is no ordinary asset.”

Malampaya supplies close to about 26 percent of the power needs in Luzon or about 3.7 million households.

“We have to make sure that any transaction should go through a thorough review and due diligence by the government to assure the Filipino people that whoever is going to step in is highly qualified, competent, and can deliver electricity,” Gatchalian said.

In a Senate hearing last July, Philippine National Oil Co. – Exploration Corp. (PNOC-EC) president Rozzano Briguez told the committee on energy that $375 million of the $565 million sale of Chevron to UC Malampaya Philippines Pte. Ltd., a unit of Udenna, was financed through loans from three major banks and the remaining amount of $157 million was sourced through the gas field’s “net entitlements” while $33 million came from the buyer’s stock issuance.

PNOC-EC holds a 10 percent stake in the Malampaya project.

Article was originally published in Philippine Star and written by Danessa Rivera.