Duterte crony Dennis Uy breaks commitments in P34B Clark City loan: Find out why BDO, PNB, Bank of China don’t mind
Udenna Development Corp. of bilyonaryo Dennis Uy has breached its debt ratio and collateral cover requirements in the P34 billion loan it used to buy out the Kuwait investors from the 177-hectare Clark Global City Corp. (CGCC) project.
But in a financial report prepared by Punongbayan & Aurallo Grant Thornton, Udenna claimed the banks behind the dollar-denominated loan – Banco De Oro (BDO), Philippine National Bank (PNB), and Bank of China (BOC) – apparently do not mind that it has not maintained enough capital to keep its debt ratio down or it was short of its collateral cover.
P&A Grant Thornton claimed that Udenna had enough goodwill for BDO. PNB and BOC to turn a blind eye on this shortcoming.
“The OLSA (Omnibus Loan and Security Agreement) requires CGCC to maintain a minimum debt service coverage ratio of 1.10 times, debt-to-equity ratio of not more than 2.33 times and a collateral cover ratio of 1.00 times,” said P&A Grant Thornton.
“As of December 31, 2017, CGCC has breached these covenants; management, however, believes that the non-current classification of the loans payable is appropriate considering the Company’s relationship with BDO, PNB and BOC and its history of prompt payment. Furthermore, to comply with the required debt-to-equity ratio, UDEVCO granted advances to the CGCC, which was held for future stock subscription,” it added.
The CGCC loan is Uy’s biggest loan, accounting for nearly half his P74 billion debt load as of end-2017. The loan is payable in 10 years and carries an interest rate between 7.61 perent and 8.98 percent.