Banco de Oro Universal Bank, the country’s largest private financial institution, moved to seize loan collateral from Davao’s Dennis Uy on Friday night, firing the opening salvo in a series of moves that – depending on the ability of controversial businessman to settle his debt in four days – could lead to the biggest corporate default in Philippine history.
The Inquirer has learned that BDO, which provided the bulk of the financial muscle for Uy’s acquisition spree under the Duterte administration, sent a foreclosure notice to the businessman’s flagship holding company , Udenna Corp., in an effort to force him to the negotiating table and agree to “an orderly settlement.”
Uy has until Tuesday July 26 to respond favorably to the advice of BDO, which leads a syndicate of banks exposed to its six-year debt-fueled corporate buying spree.
The Inquirer spoke to three senior bank officials with direct knowledge of the transaction, but they spoke on condition of anonymity. The Inquirer has also reached out to Uy and his company, but has yet to receive their responses.
A banker said this latest debt problem to hit Uy was sparked by the businessman’s inability to keep up to date with lease payments at Clark International Airport Corp. (CIAC) for the commercial enclave he was building on the land of the former US military base.
“It’s just a small debt that’s owed – $4 million – but since the CIAC was already preparing to seize, the banks decided to go ahead and seize Uy’s assets so that they become the new owners who will deal with CIAC,” he said. “Dennis [Uy] has until Tuesday to pay.
The banker, however, expressed concern about the so-called cross-default clauses that would be present in all of Uy’s loan agreements with its creditor banks which, at its peak halfway through the Duterte administration, would have reached 110 billion. pesos.
A cross-default clause, which is common practice when structuring business loans, makes an incidence of default by the borrower, regardless of size, legally default on all of its other debts.
A default of this magnitude would be the largest private loan in the history of local businesses, eclipsing the degraded loans of Subic-based Hanjin Shipyards by $412 million, or 23 billion pesos at the exchange rate in vigor.
“Conservatively, Dennis Uy’s outstanding loans today are expected to be between 70 billion and 80 billion pesos, excluding loans from Dito Telecommunity which have been loaned out by banks based on the creditworthiness of China Telecom,” said another person familiar with the deal.
A bank official said the 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 table. negotiations.
“Foreclosure is not the preferred option,” he said. “The situation can be corrected if they are ready to work with the banks.”
To subscribe to MORE APPLICANT to access The Philippine Daily Inquirer and over 70 titles, share up to 5 gadgets, listen to news, download as early as 4am and share articles on social media. Call 896 6000.