Uniwide Holdings Inc. has sought the permission of the Securities and Exchange Commission (SEC) to settle its remaining P5.53-billion debt to unsecured creditors through dacion en pago instead of cash as provided under the approved second amended rehabilitation plan.
Uniwide said that higher operating expenses, the unexpected closure of its second most profitable outlet, and lack of supplier support for supermarket operations, hobbled the company’s ability to service its unsecured debt.
Julio Elamparo, government-appointed rehabilitation receiver for the Uniwide Group of Companies, said the SEC’s approval of the third amendment to the recovery program will lead to the recovery of the warehouse club operator’s core business group and the eventual settlement of obligations to all its creditors.
“A review of the group’s operation for the past four years from the year the second rehabilitation plan was approved by the SEC reveals the need for a revised operating strategy for Uniwide to recover from its losses and to be able to satisfy its obligations specifically to unsecured creditors,” Elamparo said.
Elamparo said the company plans to offer other properties to be used as payment to unsecured creditors.
From a high of P10.45 billion, Uniwide’s debt to unsecured creditors has gone down to P5.53 billion by way of payment in cash or assignment of properties.
Elamparo said gross margin from supermarket sales averaged only six percent to nine percent over the past three years, which translates to about two percent net income from supermarket operations, not enough to sustain Uniwide’s operations.
In addition to this, payment terms to 60 percent of the supermarket suppliers especially the multinational ones are advanced. “With this arrangement, there is no way that the company can turnover the cash generated from the supermarket sales,” Elmaparo said.
Elamparo said that while the group has earmarked a total of P7 million for cash payments for its unsecured creditors for 2006, the company opted not to release such sum until substantial amount is generated.
According to Elamparo, Uniwide’s inability to stock its shelves with products has resulted in more than 50-percent decline in gross sales from 2002.
Elamparo, however, is optimistic that with management’s decision to lease out the supermarket operations to Suysing Commercial Corp., Uniwide can now concentrate on its higher margin dry goods sales, which has a 20-percent gross profit rate.
He said Uniwide is hoping to enhance its market position in other items such as toys and school supplies, targeting the C & D markets, which are mostly the Divisoria and Baclaran customers.
To generate additional revenues, Uniwide will maximize its available areas/spaces on all operating stores to be converted to selling area and lease to prospective tenants.
While it has reduced its manpower in an effort to keep the viability of its retail operations, Uniwide continues to directly employ about 3,000 employees and indirectly about 10,000 to 15,000 workers of its trade suppliers and concessionaires.
Elamparo also disclosed that Uniwide continues to explore possibilities with prospective investors. “While awaiting the entry of one, Uniwide will ensure that operations become more efficient and profitable through enhanced product mix, suppliers’ support, more aggressive marketing programs and managed operating costs. This will enable the company to generate the cash requirements for operations and debt servicing,” Elamparo said.