Duterte ally opens door to offload fuel retailer after yearslong buying spree

MANILA — Philippine tycoon Dennis Uy, a campaign backer of President Rodrigo Duterte, has embarked on an asset sale as his group moves to cut debt after an aggressive acquisition spree.
The CEO of the country’s newest mobile operator, Uy has invested in over a dozen companies — from pastry shops to energy ventures — in a leverage-backed expansion push in recent years. This buying binge has raised concerns over his group’s debt profile, as the pandemic-induced recession deals a blow to Philippine businesses.
On Tuesday, Uy-led fuel retailer Phoenix Petroleum Philippines said its board had mandated the management to enter into negotiations on a possible sale of assets or investments as “part of its debt management and funding activities.”
The stock exchange filing, which serves as a notice to potential buyers, follows the sale by another Uy-led company of its entire stake in loss-making logistics venture 2GO Group. Chelsea Logistics and Infrastructure Holdings sold the 31.7% stake to conglomerate SM Investments for around 6.6 billion pesos ($136 million).
“The proceeds of the sale will be used to pay down the loan obtained for the acquisition of the shares,” Chelsea said last week when it announced the divestment.
Phoenix, which has recorded falling revenue and losses as lockdowns hammered the transportation industry, is one of the earliest ventures embarked upon by Uy, an entrepreneur from the southern city of Davao, where Duterte served as the long-time mayor before becoming president in 2016.
After Duterte came to power, Uy took over shipping lines, the local franchise of the Family Mart convenience store, a culinary and management school, a logistics hub and Ferrari car dealership, among other businesses.
Uy had described the aggressive acquisitions as a bet on the country’s economic prospects under a president whose campaign he helped finance. “[When] you believe in the leadership, you believe in the potential of the country,” he told Nikkei Asia in 2017.
Uy has also forayed into such capital intensive projects as integrated resort and casino projects worth around $1 billion and mobile operator Dito Telecommunity, which launched commercial mobile services early this month and is obliged to invest at least $5 billion over a period of five years.
The tycoon is also bidding for Royal Dutch Shell’s 45% stake in the Malampaya gas field, which supplies around 40% of the power requirements of the Philippines’ main Luzon island, where Manila is located. Uy purchased a stake of the same size from Chevron last year for $565 million.
As Uy sealed multiple deals, concerns about his group’s debt have also mounted. But Udenna, Uy’s privately held holding company, said its debt-to-equity ratio had improved from 3.09% in 2018 to 2.7% in 2019, though this is still higher than other Philippine conglomerates.
In 2019, Udenna booked 3.39 billion pesos in net profit on a record 110.67 billion pesos in revenues, according to the company. The company has yet to disclose its 2020 results, which are expected to outline the impact of the pandemic on the conglomerate.