MANILA, Philippines – Businessman Dennis Uy reached an agreement with lenders over a $4-million obligation to state-controlled Clark International Airport Corporation (CIAC), avoiding a possible series of corporate defaults fueled by his debt-driven buying spree.

Udenna Corporation on Monday, July 25, said Uy’s Clark Global City Corporation (CGCC), CIAC, and a consortium of banks led by BDO Unibank have “settled the matter,” pertaining to debt owed to CIAC under a lease agreement, which amounted to $4 million or P224 million.

The press release, however, neither mentioned the amount nor the terms of the deal. 

As reported by the Inquirer, BDO Unibank moved to foreclose on Uy’s loan collateral after the businessman encountered problems with his lease payments to CIAC. BDO has been Uy’s biggest financier for his acquisitions for the past six years.

Uy was building the so-called “BGC of Pampanga” in a bid to create a new business center in Luzon and decongest Metro Manila. 

While the $4-million obligation is considered relatively small in corporate transactions, Uy failing to pay up would trigger cross default provisions. This means other lenders could go after his obligations and trigger what could be the Philippines’ largest corporate default in history.

Analysts have pegged Uy’s debt between P80 billion and over P100 billion.

Udenna repeatedly disputed BDO’s move to declare a default. (READ: Dennis Uy’s growing empire and debt)

“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, July 27, 2022,” Udenna said, referring to Global Gateway Development Corporation, a subsidiary of CGCC.

“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,” it added.

The Inquirer, citing an unnamed bank official, said “BDO’s intention in serving the foreclosure notice was not to seize Uy’s assets, per se, but to force the businessman to come to the negotiating table.”

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Uy’s debt

Uy’s buying spree for companies has long worried business circles. Analysts have flagged some of his companies to be overleveraged and for diluting minority shareholders throughout the years.

Uy, a campaign donor of former president Rodrigo Duterte, expanded his business empire through debt. His major acquisitions include a $1-billion deal to take over the Malampaya gas field from Shell and Chevron.

Uy also won the bidding for the third major telecommunications player, where he teamed up with Beijing-controlled China Telecom to launch Dito Telecommunity.

Now, he is selling some of his acquisitions off.

Uy’s Chelsea Logistics sold its stake in logistics company 2GO to SM in 2021, just less than five years after acquiring it.

In June, tycoon Enrique Razon Jr. announced that he will buy out Uy from the Malampaya consortium. 

Razon’s Bloomberry is taking over Uy’s business interests in Cebu and Clark from PH Resorts as well.

Special purpose entity CarVal Investors also acquired an asset in Clark Global City for an undisclosed amount. – Rappler.com