BDO earlier this week spearheaded a consortium of banks that served a notice of default to Udenna Corp. Udenna\u2019s majority shareholder, Dennis A. Uy, confirmed that he received a notice of default from BDO and other lenders last July 23 for allegedly failing to make lease payments to Clark International Airport Corp (CIAC) in the amount of US$ 4 Million, according to the Inquirer. Udenna will have until Tuesday to respond to the consortium of banks.<\/p>\n\n\n\n
What\u2019s the deal? Udenna Corporation, a private entity, owns Global Gateway Development Corporation (GGDC) through its subsidiary Clark Global City Corp (CGCC). GGDC has a 75-year lease agreement with BCDA\u2019s Clark International Airport Corporation (CIAC). The subject property is a 177-hectare property which has been touted as the next major business center 80 km North of Metro Manila. There are already some locators in CGCC including SM, W Group, Suyen Corp, Century Properties and Megawide among others. Total leased property is about 18% of the 177-ha lot.<\/p>\n\n\n\n
Our view:<\/strong> Dacion En Pago? In law, “dacion en pago” or “payment in lieu” means delivering an asset to settle a debt.<\/p>\n\n\n\n But according to BDO, they are not initiating the foreclosure process with the intent of securing the property, but rather to bring the borrower to the discussion table. We would like to believe this, because as early as 2017, CDCC was already in breach of the debt covenants and yet BDO didn\u2019t move in on the property. We shall see if BDO and the other financial lenders will remain patient this time around.<\/p>\n\n\n\n Playing around with the numbers to see what the lenders will be left with assuming the delayed payments cannot be \u201cremedied\u201d — assuming the property is worth Php1,000\/sqm, the 177-hectare lot only amounts to Php 1.77 Billion, significantly less than the Php 70 Billion floated around as the total debt incurred by Udenna for this project.<\/p>\n\n\n\n The cash flow given the 18% occupancy, meanwhile, gives the lenders an annual cash flow of Php 513 Million, translating to only Php 32.35 Billion for the remaining life of the lease. The math doesn\u2019t quite check out unless a white knight developer comes in and creates value. The story has just begun, more on this later on.<\/p>\n","protected":false},"excerpt":{"rendered":" IPO Analysis Special Report<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-316080","post","type-post","status-publish","format-standard","hentry","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/316080","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=316080"}],"version-history":[{"count":2,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/316080\/revisions"}],"predecessor-version":[{"id":320466,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/316080\/revisions\/320466"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=316080"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=316080"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=316080"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}