With the departure of his principal patron, outgoing President Duterte, from Malacanang, tycoon Dennis Uy has no choice but to grab every chance to wiggle his way close to the presumptive president, Ferdinand Marcos Jr. by being among the first to visibly attend the May 9 dinner of Marcos Jr. at his headquarters in the company of the old rich, oligarchs and society ladies. He even posed at the photo with his wife, right behind Marcos Jr.
Uy and Marcos Jr. has only one thing in common-- the Chinese connection, which Duterte cemented during his administration and which Marcos Jr. vowed to pursue.
Of late, Uy had been on a selling binge.
His assets ballooned from P31 billion in 2015, before Duterte became president, to P310 billion in 2020-- has been on a selling binge in recent months because his companies, along with other local conglomerates suffered heavily during the lockdowns from the pandemic and the slowdown in the global economy.
For Uy's group, the economic downturn stoked concerns over the debt burden on his expanding empire.
His divestment seems to be timed with the fast-approaching departure of his principal patron—the outgoing president.
Debts leapt faster
His flagship company’s, Udenna, assets ballooned from P31 billion in 2015 to P310 billion in 2020. But its debts leapt faster from P22 billion to P255 billion pesos, according to its financial reports.
Udenna reported an P8.6 billion net loss in 2020 from a P3.3 billion pesos profit in 2019, and at least one subsidiary sought temporary debt relief from creditors to survive the crisis. Uy’s Udenna Corporation saw total liabilities rise to P254 billion (around $4.85 billion) in 2020 from P171 billion in 2019.
From buying to selling spree
Under Duterte's presidency, the soft-spoken entrepreneur has conducted an acquisition spree that stunned Manila's commercial elite. Since 2016, he has either taken over or invested in more than a dozen companies, from the local franchise of Family Mart convenience store chain to Ferrari's Philippine car dealership. His inroads into capital-intensive sectors spanned telecoms, casinos and real estate, as well as energy.
But because the term of President Duterte is nearing its end, Uy—whose links with the incoming administration is not clearly defined and so with Duterte’s non-endorsement of Marcos Jr.—finds himself deep in debt and want to sell out in several companies to save himself of the trouble of being hounded by local and foreign funders.
Reports of Uy, a major campaign donor of Duterte, selling off assets has swirled for months, after his debt-driven buying spree for companies worried creditors.
A Reuters report said Uy is also considering selling the Malampaya gas field, which he acquired from Chevron and Shell for approximately $1 billion.
Buyers were also looking at Uy’s other assets, including Phoenix Petroleum and third telco Dito Telecommunity.
Dennis Uy of Davao (as distinguished to Uy of Pampanga who owns Converge) is selling off another piece of his crumbling empire built on a mountain of debt during six years of Duterte.
Ultra- billionaire Enrique Razon’s Bloomberry Resorts Corp. (BLOOM) announced it had signed a “term sheet” on May 6 to take over the Cebu and Clark casino projects of PH Resorts Group Holdings, Inc. (PHR) owned by Uy.
“The term sheet covers the proposed investment of BLOOM into Lapulapu Leisure, Inc. which is developing the Emerald Bay Resort Hotel and Casino in Punta Engano, Lapu-Lapu City, Cebu, and into Clark Grand Leisure Corp. which is developing The Base Resort Hotel and Casino in Clark in Pampanga,” BLOOM said in a disclosure just minutes before the opening of trade.
Last January, Nikkei reported that despite being cash-strapped Dennis Uy eyed the Malampaya gas field, which supplies 1/5 of the country’s power need, which could have given him a foothold in a strategic industry. But last February, Uy’s nearly $1 billion buyout of Malampaya—an asset held for decades by Royal Dutch Shell and Chevron—plunged into uncertainty as political support for the acquisition crumbled. Besides, the Philippine National Oil Company refused to sign off the deal, which prompted Uy’s peers to ask the Senate to investigate.
The developments surrounding Uy's Malampaya takeover reflect how the political climate in the Philippines can make or break businessmen's fortunes. Uy was among those spared in Duterte's war against "oligarchs" that brought some of them to their knees, Nikkei said.
Uy also sold his shares in 2Go to the SM Group (making it the majority owner) in March while the board of Phoenix Petroleum approved a possible asset sale: the casino project in Pampanga, which was also suspended.
Now, Uy has to navigate a changing political landscape as well as the post-pandemic recovery, with analysts expressing caution -- for example, regarding the ongoing fundraising for his telecom venture. DITO CME Holdings -- which holds Uy's stake in Dito Telecommunity -- last month priced a stock rights offering at the lowest end of its target range. Analysts attributed the steep 17.5 percent discount to DITO's tanking share price and to uncertainties surrounding the telecom venture's future.
His BGC-like project measuring 142,000 square meters in Pampanga was acquired by Aeropark Development Philippines Inc., a special purpose entity owned by CarVal Investors, an investment management company “focused on distressed and credit-intensive assets.” Aeropark is a five-building development that is envisioned to be a hub for BPO tenants and multinational companies in Pampanga.
The company added that they are the “largest and controlling investor” in the West Aeropark deal.
CarVal said it worked with another company called SofCap Partners, an equity investment firm based in the Philippines, where the latter would manage the West Aeropark Assets.
“CarVal/ADPI and SofCap worked closely with Udenna’s GGDC and its existing bank lenders to consummate the transaction. Proceeds from the transaction will ultimately support Udenna’s ongoing liabilities management exercise,” the company said.
Acquisitions since 2016
Uy’s buying binge during Duterte’s term (2016 to 2022) included: 2Go Group in September 2016; in 2017 he bagged the license to build a $341 million resort and casino in Cebu for which he obtained a $220 million loan from Bank of China; he bought Enderun Colleges, a hospitality management school in BGC; in August he bought Petronas Energy Philippines for $126 million after an IPO of $115 million at PSE; in November 2017 he bought a 177 hectare property in Clark Freeport Zone and he bought Starlite Ferries from the family of Energy Secretary Alfonso Cusi along with Courier Worklink Services; in 2018 he bought the local franchise of Family Mart in January and Conti’s in September; in July 2019 his Udenna and China Telecom got telecom license after winning the 2018 auction, in October he became exclusive local distributor of Ferrari and in November he bought the local Wendy’s hamburger franchise; in 2020 he bought 45 percent Chevron’s stake in Malampaya for $565 million and in March 2021 he sold his entire 31.7 percent stake in 2Go Shipping to cut debts, in May he struck a deal to buy Shell’s 45 percent stake in Malampaya for $460 million and in October he suspended his Clark casino-resort project.
"There are a lot of doubts on what will happen if the current administration changes," said Jeff See, analyst at Mercantile Securities.
The classy and exclusive Amanpulo Island in Cuyo, Palawan has been reserved from June 30, where a victory party of the rich, powerful and influential families in Philippine society will spend the weekend partying and drinking.