Udenna says Clark debt issue settled on Monday

By Arjay L. Balinbin, Senior Reporter

UDENNA Corp. said the default declaration in connection with certain obligations of its subsidiary Global Gateway Development Corp. (GGDC) with state-run Clark International Airport Corp. (CIAC) was settled on Monday.

“In relation to the various reports recently published, which involved Clark Global City Corp. (CGCC), CIAC, and a consortium of banks led by BDO Unibank, we wish to announce that Udenna Corp. settled the matter today, 25 July 2022, prior to the mandated deadline, and to the satisfaction of the majority lender and the consortium banks,” Udenna said in a statement.

“We would also like to clarify that the declaration of default was in relation to certain obligations of GGDC with CIAC, which are due only on Wednesday, 27 July,” it added.

GGDC, a subsidiary of CGCC, holds leasehold rights to the 177-hectare land within the Clark Civil Aviation Complex, Clark Freeport Zone in Pampanga. It is developing the Clark Global City.

The Philippine Daily Inquirer reported on July 23 that banks led by BDO Unibank, Inc. had moved to declare Udenna in default after missing Clark lease payments.

“To be clear, CGCC or GGDC did not fail to make any interest or principal repayments with its debt to the consortium banks, and thus, in contention, CGCC replied to the consortium banks to dispute the default 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,” Udenna said.

It noted that the stated financial liability “was not a liability to the consortium banks, but an obligation of GGDC to CIAC, which, as stated above, has already been settled.”

BDO Unibank confirmed on Monday that it had issued a notice of default to CGCC.

“CGCC has assured BDO that it is in the process of updating its obligations to its lessor, CIAC, on or before 27 July 2022,” it said in a disclosure to the stock exchange.

“The relevant obligations of CGCC to BDO are secured and a default will not have a material adverse effect on the financial condition and business of BDO,” it added.

Monday morning saw a decline in the share prices of listed companies related to Udenna, the flagship company of Davao-based businessman Dennis A. Uy.

There was a knee-jerk selling reaction that caused large declines in the share prices of companies related to Udenna, Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in a phone message when sought for comment.

“Naturally, nervous investors made a beeline for the exit as a default might have a material impact on Udenna’s ability to optimize the potential operation of its subsidiaries going forward,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a separate phone message.

Mercantile Securities Corp. Analyst Jeff Radley C. See said “all of Uy’s listed firms recovered” as a result of Udenna’s Monday afternoon press release announcing that the company had “settled” the matter.

The afternoon news “may have saved” Udenna’s listed subsidiaries from a virtual free fall, “but not enough to reverse declines,” Mr. Arce said.

DITO CME Holdings Corp. shares closed 3.43% lower at P3.94, Chelsea Logistics and Infrastructure Holdings Corp. closed 11.81% lower at P1.12, Phoenix Petroleum Philippines, Inc. closed 10.94% lower at P8.71, and PH Resorts Group Holdings, Inc. closed 2.50% lower at P0.78.

Earlier on Monday, Reuters reported: “DITO CME fell as much as 9%, Chelsea Logistics sank 16%, Phoenix Petroleum dropped 6% and PH Resorts retreated as much as 7.5% in the first 30 minutes of trade.”

“BDO continues to tank due to the exposure that the bank has,” Mr. See said in a phone message.

BDO Unibank shares closed 4.62% lower at P115.60 apiece.

“At the end of the day, these are all knee-jerk reactions. Investors want to know what will happen to Dennis Uy and his listed firms with huge debts,” Mr. See added.