July 25, 2022

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Udenna denies debt default as shares in Philippine-listed units slide

MANILA (UPDATE) – Philippine conglomerate Udenna Corp, owned by a close associate of former President Rodrigo Duterte, said on Monday it has received a notice of declaration of default from lenders, sending shares in related companies sharply down in early trade.

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. The broader index fell as much as 1.6%.

The four companies are owned by unlisted Udenna, which has pursued a debt-fuelled acquisition and expansion spree since 2016.

“There has been, in fact, no event of default or, at the very least, no irremediable event of default,” Udenna said in a statement on Monday.

The four listed companies were working to “immediately resolve” the matter on Monday, ahead of a July 27 deadline to pay a $4 million liability, they said in separate disclosures to the stock exchange. “There should be no effect on the business, financial condition, and operations,” they added.

Under existing loan terms, a default in one debt could mean a default in other liabilities.

Udenna chairman Dennis Uy, 48, was among Duterte’s top campaign donors. Uy oversaw the conglomerate quadrupling its portfolio to more than 100 firms in the first four years of Duterte’s presidency, in sectors ranging from gaming, shipping, education and construction to fast food, ferries, tourism, telecoms and sports cars.

Uy has since sold some of the companies, including a controlling stake in a South China Sea gas field, to trim debts.

Udenna’s total liabilities rose by nearly half to P254 billion ($4.5 billion) in 2020 from P171 billion in 2019, the latest available data from the corporate regulator showed. — Reuters