Market players are still scratching their heads why BDO Unibank chaired by ultra bilyonaryo Tessie Sy was in a rush to issue a foreclosure notice last Friday, January 22, against Udenna Corp. of Duterte crony Dennis Uy.
As it turned out, Udenna was right in disputing BDO’s “default conclusion” issued five days before its deadline to pay its dues to state-run Clark International Airport Corp. (CIAC).
Yes, Udenna’s Clark Global City, which is developing a 177-hectare property inside the Clark Freeport Zone, has been late in settling its rent (which it settled on July 25) just like most companies struggling through the pandemic.
But no, Udenna has never missed any of its interest or principal payments to the BDO-led syndicate of banks.
Uy has had difficulties meeting much bigger loan commitments of Udenna’s other subsidiaries – Chelsea Logistics and PH Resorts Group Holdings (PHR) – since the pandemic struck in 2020 but it has never been issued a default notice.
In contrast to the trigger-happy BDO, China Banking Corp. (CBC) chaired by ultra bilyonaryo Hans Sy (brother of Tessie) has patiently dealt with PHR which has not paid its P6 billion loan (used in building a Cebu casino) since 2021.
Many market observers are asking why BDO was in such a hurry to foreclose on Udenna’s assets less than a month after Uy’s patron, former President Rodrigo Duterte, stepped down from office.
They noted that during the Duterte administration, Uy did not only emerge as one of the biggest borrowers of BDO and CBC but also a major business partner of the Sy family.
In 2017, SM Investments Corp. (SMIC) bought a 34.5 percent stake in 2GO – the country’s largest integrated supply chain operator whose businesses include shipping, freight forwarding, warehousing and express delivery services – which was then controlled by Uy’s Chelsea. Four years later, SMIC took control of 2G0 by buying out Chelsea’s 31.73 percent stake.
Shortly after Uy wrested control of the Clark Global City project from a Kuwaiti group and extended the lease contract from 50 to 75 years, Udenna secured a P52 billion loan from a bank syndicate led by BDO.
Three years later or in 2020, SM Prime agreed to be an anchor tenant by leasing up to 10 hectares of land in Clark Global City.
Udenna’s listed companies had a total of P55 billion in loans as of end-2021 and BDO had the biggest exposure with P15.7 billion.
A Babbler said BDO’s move to publicly humiliate Dennis Uy with its premature default notice turned off a lot of investors.
“The timing is really bad considering Uy has just lost his influence in government. Whoever wanted to get close to the Duterte administration had to pass through Uy. He deserved better treatment given that he was a major client and business partner during the Duterte administration,” the Babbler said.
One of BDO’s clients revealed that the bank’s client relations had deteriorated since the retirement of senior executive vice president Walter C. Wassmer in March 2021. “Most clients don’t like the new officers on board. They are too eager to foreclose on loans,” the BDO corporate client said.
Another Babbler pointed out that buried under Udenna’s mountain of debt was a prime property in one of the most potent growth centers in the country.
“Mahal na ngayon ang lupa diyan sa Clark. Murang-mura makukuha yung lupa ng sino mang bangko na mag-foreclose diyan,” said Babbler2.
It seems former President Joseph Estrada’s truism – “Weather, weather lang ‘yan” – applies not only to politics but also in business.