Uniwide settles debt with BPI through dacion en pago

The Uniwide Group of Companies has signed a deal with the Bank of the Philippine Islands that will allow it to settle its debts via dacion en pago or payment-in-kind scheme.

Uniwide said the move is in line with the approved second amended rehabilitation plan filed with the Securities and Exchange Commission.

Under the agreement, Uniwide will transfer its properties in Avenida, Manila and Libis, Quezon City to BPI in exchange for the full settlement of its debt.

Uniwide stopped the operations of its warehouse clubs in Avenida and Libis last June 30 in preparation for the transfer of these properties to BPI and to save on operating costs.

The company said its nine remaining stores in Caloocan, Coastal Mall in Roxas Boulevard, Metromall in Las Piñas, EDSA Central, Sucat, Novaliches, Baclaran Pearl Plaza, Tarlac and Cabuyao, Laguna will continue to operate.

Uniwide said it will continue to focus on measures aimed at improving its retail operations to achieve its objective of settling all its obligations.

Under the rehabilitation plan, the assets of the Uniwide group, as well as personal properties of the controlling Gow family which are being held by creditors as security to their loan, will be used to settle the company’s outstanding debt. These include three operating stores, two malls (Metromall and Coastal Mall), two future store sites in Cubao and Iloilo, commercial and residential lots in Cavite and Laguna, as well as commercial lots/properties in Caloocan City, Paranaque, Pasig, Quezon City, General Santos City, Bulacan and Iloilo. These properties are valued at a combined P12.97 billion.

The total amount to be settled with secured creditors, net of debts already settled, is estimated at P6.61 billion, with Equitable PCI Bank having the biggest exposure of P1.74 billion.

The dacion of properties to the creditors shall be executed either via direct transfer or the formation of special-purpose companies.

Aside from Equitable-PCIBank and BPI, Uniwide’s other secured creditors include Philippine National Bank, Allied Banking Corp., ING Bank, Rizal Commercial Banking Corp., PCCI and Land Bank of the Philippines.

Uniwide proposes to settle its P2.54 billion in obligations to unsecured creditors – which include trade suppliers, contractors and private lenders – through the conversion of 50 percent of the unsecured debt into 15-year convertible notes that are redeemable anytime at the option of Uniwide.

The other half of the unsecured debt shall be restructured into a 10-year loan with zero interest, a grace period of three years and whose principal payment will start only on the fourth year. The restructured debt will be paid from the cash flow from the retail operations.

The Uniwide group suffered from liquidity problems as a result of the economic crunch and a failed diversification program. It filed for the suspension of debt payments and rehabilitation with the SEC in June 1999.