Philippine conglomerate Udenna Corp, owned by a close associate of the country’s former president, said on Monday its subsidiary had paid a debt to avert a default on other loans, helping shares in its related firms to stem huge earlier losses.
Udenna, one of the country’s fastest growing companies, said its subsidiary, a land lease firm at the site of a former U.S. military base, had on Monday paid a $4 million liability to a government agency and a consortium of banks.
Under existing loan terms, Udenna‘s default in one debt could mean a default in other liabilities.
“Udenna settled the matter today, prior to the mandated deadline, and to the satisfaction of the majority lender and the consortium banks,” it said in a statement.
Udenna‘s total liabilities rose by nearly half to 254 billion pesos ($4.5 billion) in 2020 from 171 billion pesos in 2019, according to the latest available data from the corporate regulator.
Monday’s debt settlement helped shares in Udenna‘s four listed firms to recoup some losses, after DITO CME fell as much as 9%, Chelsea Logistics sank 16%, Phoenix Petroleum dropped 10% and PH Resorts retreated as much as 7.5% in Monday morning trades, versus a 1.6% decline of the wider index.
The broader debt was accumulated during a rapid expansion and acquisition binge by owner Dennis Uy after his hometown ally Rodrigo Duterte won the presidency in 2016. Uy was a key campaign donor.
Over the following four years Udenna quadrupled its portfolio to more than 100 firms, in sectors from gaming, shipping, education and construction to fast food, ferries, tourism, telecoms and sports cars.
Udenna and Uy have insisted they received no preferential treatment from Duterte and complied with all laws.
The company has sold some of the assets, including a controlling stake in a South China Sea gas field, to trim debts.