Davao’s Dennis Uy restructures loans with China Bank, courts new investor
MANILA -Davao-based businessman Dennis A. Uy cleared a multibillion peso debt restructuring hurdle with Sy-led China Banking Corp. by selling and re-leasing the 12.5-hectare beachfront property in Mactan, Cebu for its ongoing Emerald Bay casino.
This ensures the project’s continued financing while it holds “final negotiations” with a new strategic investor.
Uy’s listed holding firm PH Resorts Group Holdings, which has been struggling to complete the $300-million Emerald Bay project, announced on Tuesday the successful restructuring of a portion of its loans. It also retains an option to repurchase the land from China Bank.
It follows other moves by Uy’s sprawling but debt-ridden group to secure fresh financing. This includes the recent downsizing of its stake in telecommunications holding firm DITO CME Holdings to help bankroll its capital spending commitments.
PH Resorts still needs additional resources to complete the Cebu casino project after talks with gaming and ports tycoon Enrique Razon Jr. ’s Bloomberry Resorts Corp. fell through earlier this year.
The company said on Tuesday it signed a non-exclusive and non-binding agreement with Cebu-based AppleOne Properties for a potential investment. The firm, owned by couple Ray and Venus Manigsaca, is the developer of the Sheraton Cebu Mactan Resort and AppleOne Equicom Tower.
Investors cheered the announcements, causing PH Resorts’ share price to surge by as much as 16 percent before ending the session up by more than 8 percent to P0.67 per share.
The restructuring allows the group to settle a P3.1-billion bridge loan facility extended by China Bank in 2018. PH Resorts added that it retained possession and use of the property “in order to finish the construction and development of the Emerald Bay project”.
PH Resorts said in its latest financial report the 12.5-hectare property was valued about P7.1 billion as of December last year.
A source close to the matter said Uy’s group intends to buy back the land with the help of a strategic partner.
Thus, talks with potential white knight AppleOne are critical since this could pave the way for a majority equity investment in PH Resorts’ subsidiaries that are involved in the development of Emerald Bay.
No deal has been closed and the parties have 60 days to complete final negotiations, the disclosure showed.
“The debt restructuring alongside a potential investor AppleOne Properties Inc. is welcome news for [PH Resorts],” Gabryle D. Aguila, head of equity research at stock brokerage house Unicapital Securities, told the Inquirer on Tuesday.
“It allows the company the much needed runway to address shortfalls after the [Bloombery] investment plan earlier this year failed to materialize,” he added.
During the first semester of 2023, PH Resorts had total assets of P18.8 billion against liabilities of P14.1 billion, which includes P6.1 billion in loans. Losses during the period ballooned to P1.1 billion versus P333.1 million a year ago mainly due to interest payments.
Uy’s empire racked up significant debts when it rapidly expanded during the term of President Duterte.
The economic downturn, amplified by the COVID-19 pandemic, eventually forced him to sell assets such as logistics firm 2GO Group Inc. to the Sy family’s SM Group and the Malampaya deepwater gas-to-power project to Razon.