Uniwide plans P1-B convertible notes as part of rehab program

The Uniwide Group of Companies plans to issue P1- billion worth of convertible notes to its unsecured creditors in line with its rehabilitation program, aimed at further reducing its debts to more manageable levels and regaining its status as one of the country’s largest discount retail firms.

Under the plan, Uniwide will settle P2.59 billion in obligations to unsecured creditors through the conversion of 50 percent of the unsecured debt into 15-year convertible notes that are redeemable anytime at the option of the firm.

The other half of the unsecured debt will 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 out of the cash flow from retail operations.

In line with the planned issuance, Uniwide has asked the Securities and Exchange Commission (SEC) to exempt the convertible notes from the agency’s registration requirements.

Out of the total unsecured debt of P2.59 billion, the bulk is held by trade suppliers. Other unsecured creditors include contractors with a total loan exposure of P407.91 million; lenders (P99.75 million); Coastal Mall tenants (P85.3 million); and non-trade suppliers (P327.46 million).

Uniwide said it would issue the notes as soon as clearance from the SEC is obtained.

As for its secured debt, Uniwide is presently negotiating with Hong Kong investors for the operation of Coastal Mall (Manila Bay). The company is looking at a fresh infusion of P700,000 which will be used to pay off creditor-banks.

Since the remaining lease period of the Coastal Mall is 11 years, the new investors are expected to renovate the area as soon as the agreement is executed for the immediate business operation.

Uniwide has a total secured debt of P3.68 billion, which the company hopes to settle through dacion-en-pago arrangements or payment-in-kind-scheme with its creditor banks.

Although the rehabilitation plan allows the dacion en pago of even the operating assets, the plan also requires a leaseback arrangement on the Avenida Department Store, Coastal Mall and Metro Mall Warehouse Clubs and the Ingasco, Caloocan property for at least 10 years.

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

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