MANILA, Philippines — Davao-based businessman Dennis Uy is now facing a hurdle in his planned takeover of the Malampaya gas facility as the Department of Energy now “extensively reviews” his company’s acquisition deals after the Senate questioned its capability to finance such purchases with only $100 (or about ₱5,000) capitalization.
In a statement issued Thursday, Energy Chief Alfonso Cusi said he ordered DOE officials to re-evaluate the sales purchase agreement between global giant Chevron and Udenna Corporation’s subsidiary UC Malampaya Philippines.
“We will continue to exhaust all measures in thoroughly evaluating the legal, financial, and technical aspects of the transaction,” the official said.
In March last year, Uy’s Udenna formally secured a 45% controlling interest in the gas field in offshore Palawan.
Cusi’s statement comes after the Senate earlier this week grilled DOE officials as lawmakers raised eyebrows on the revelation that Udenna’s unit Malampaya Energy XP Pte. Ltd.—the winning bidder for the purchase of Shell Philippines Exploration’s 45% operating stake in Malampaya gas field—has a capital of only $100.
This, despite the fact that the sale-purchase agreement costs $460 million.
Senate Committee on Energy Chairman Sherwin Gatchalian questioned Cusi on the financial clout of Uy’s group to finance the transaction.
“Basically that is the capital, will it qualify? Will this be declared as financially qualified?” he said.
Cusi argued, however, that agreements between the funders, buyer, and seller are already “beyond us”.
The energy secretary stressed the agency is more focused on the group’s capacity “to continue to work, their ability to fund the development, their ability to continue the exploration work and that they have to satisfy with us.”
Lawyer Raymond Zorrilla, Udenna’s spokesperson, said in a statement the group “sufficiently addressed” the concern.
“In addition, the seller was satisfied with our financial capabilities, among others, which is why it awarded the contract to us. With all due respect, being a private contract, the seller was in a better position to determine who is best suited to continue the Malampaya operations after conducting its own due diligence,” Zorilla said.
In a separate statement, Malampaya Energy defended its financial clout. “Firstly, Malampaya is a producing asset and generates sufficient free cash to fund its planned exploration activities. Secondly, Malampaya Energy and UC Malampaya Philippines (both Udenna-related entities) have over P10 billion in cash on their balance sheets.”
Udenna’s transaction with Shell is expected to be completed by end-2021. Following the agreement, the business tycoon now owns 90% of the gas field offshore Palawan.
Davao-based Uy, a good friend of President Rodrigo Duterte and a supporter of his 2016 election campaign, has been building his business empire for the past years, expanding to oil, shipping and logistics, real estate, and property development, education, tourism, and infrastructure.
His latest venture is the country’s new telco player DITO Telecommunity—a joint venture between Udenna and Chinese state-owned China Telecommunications.
DITO is now challenging the duopoly of Globe Telecom and PLDT with an investment of over ₱257 billion for five years. Officials previously said China Telecommunications provides technological expertise to the new telco player.
Reporting by Albert Rovic Tan