Udenna Corp is a Philippine conglomerate and some disturbing news of debt default has caused many companies involved to go down. Four companies released information about PSE to clear up confusion, and one online article addressed the original information statement documents.
PSE disclosures clarify news related to default
After multiple news reports of “defaults,” the Philippine Udenna Corp group of companies’ shares fell sharply: Chelsea Logistics tumbled about 16%, DITO CME tumbled about 9%, PH Resorts fell 7.5%, and Phoenix Petroleum was down 6%. These four companies are owned by Denis Oye, widely known as a supporter of former President Rodrigo Duterte.
Explanatory statements have been issued by each company, however, PH Resorts Group Holding, INC. (PHR), it explained that “there was, in fact, no event of default, or at least no event of irreparable default, under the master lease agreement on the part of the CGCC or GGDC.” This statement was posted on the PSE EDGE (Philippine Exchange Electronic Disclosure Generation Technology) system, and SEC Form 17-C was used to provide this explanatory statement. The source said the document bears the number C05496-2022, with the publication date set for July 25.
CGCC – Clark Global City Corp. is a subsidiary of Udenna and subsidiary of PH Resorts. GGDC – Global Gateway Development Corporation, is a subsidiary of CGCC. On July 22, the CGCC received a notice of default from a consortium of banks that are BDO Unibank Inc. Its largest lender, according to initial reports, was clearly a default by the banking consortium. However, upon clarification, the notice of default has been challenged, as the reported $4 million debt is now stated not to be a bank debt, but an internal obligation between GGDC and CIAC. It is important to note that while it is not direct bank debt, failure to pay one debt may cause other debts to default under the current loan terms, creating a domino effect.
The deadline to fix this issue is July 27, and all four companies said they are working on an “immediate solution” to the issue. At the end of the disclosure form, the PHR states that “there should be no impact on the business, financial condition and operations.”
Cluster facing development problems
The debt is tied to CGCC’s real estate development project and is just one item in a list of more than a dozen companies the conglomerate launched during CGCC’s debt-fueled expansion wave. The projects focused on expanding into telecommunications, energy, casinos, shipping and other sectors. It all started under Duterte’s management and Uy was a key financial figure in Duterte’s campaign to make it happen.
However, at the start of the pandemic, this growth trajectory was severely affected, with many companies seeing their growth stymied and/or their funding reduced or even halted. This was the case in 2019 with the Free Gathering Zone Casino. Philippine Amusement and Gaming Corp (PAGCOR) has received a request from PH Resorts to temporarily suspend its provisional license to its Clark Global City properties, the development of which Udenna is responsible for. The PH Travel and Leisure Corp unit, associated specifically with Clark Grand Leisure Corp, is set to develop the Base Resort Hotel and Casino in Clark, Pampanga, with CGCC at the helm.