Dennis Uy Company Has ‘Negative Working Capital’ For Malampaya Field – Manila Bulletin

UC Malampaya Philippines Ptd. Ltd. (UC MPPL), a company of Davao Businessman Dennis Uy, who bought the 45% stake in US energy giant Chevron Corporation in the gas field project, turned out to have “negative working capital” that he could use to meet its work program commitment for the continued operation of the Malampaya field.

In a Senate inquiry on Tuesday, September 28, the Chairman of the Senate Energy Committee, Sherwin T. Gatachalin, showed a document submitted by the Department of Energy (DOE) according to which the available working capital of the ‘UC MPPL from Uy was $ 137.156 million. His bank balance was only $ 39.170 million.

The working capital requirement of the company transferring the Chevron shares, in this case UC MPPL, has been set at $ 64 million in 2020, and $ 73 million for 2021.

When Chevron sold its 45% stake in Malampaya, it was clarified that the buying company or the transferee company was UC MPPL, a subsidiary of Uy’s Udenna Corporation; while Chevron’s company in the Malampaya consortium that sold the stakes is UC38 LLC.

In documents provided by the DOE, Gatchalian indicated that it was UC38 LLC or the consortium’s Chevron company which had positive working capital of US $ 177.421 million; and his bank balance also stood at US $ 72.283 million.

On this premise then, the legislator asked the DoE how it came to approve the sale of Chevron’s stake to the company run by Uy UC MPPL if its working capital was “negative” during the phase of valuation – and the company has also failed to provide documents to satisfactorily show that it has sufficient funding for the business it is taking in the Malampaya project.

Director Araceli S. Soluta, DOE’s chief financial officer, admitted that the agency did not assess UC MPPL’s ​​financial position as a buyer or assignee when the government approved the sale of the stake. of Malampaya in American society.

“Honestly sir, we haven’t evaluated this anymore (Dennis Uy’s UC MPPL company) because it is not a member of the Malampaya consortium. This is why we focused our evaluation on UC38 LLC ”, underlined the person in charge of the DoE.

But Gatchalian reminded the DOE that in the Udenna-Chevron transaction, it was UC MPPL that was the transferee company, therefore, this should have been the entity reviewed by the DOE on its financial assessment of the divestment of Malampaya shares from Chevron.

Soluta responded that the DOE “chose to just evaluate UC 38 LLC because the sale had already closed”, which was also the basis for the department’s approval because this company (UC38 LLC) has positive working capital.

Gatchalian, however, criticized the DOE for its apparent attempt to distort the financial evaluation process of the transaction by choosing to examine the financial position of UC38 LLC even though it is not the transferee company as it has already. established in the previous part of the hearings. In Solon’s opinion, this could not have been the basis for DOE’s financial assessment of the Chevron-Udenna deal.

“We established from the outset that the assignee is UC MPPL and the assignee is the one to be assessed under DC (Departmental Circular) No. 2007-04-0003,” noted the senator.

Senator Nancy Binay also questioned the DOE on how it gave the green light for the acquisition of Malampaya by the Udenna company despite the fact that the company led by Uy had just submitted unaudited financial statements and a draft work program – which should not have been acceptable, since caution is observed even in the merger. and small business acquisition (M&A) transactions.

Gatchalian supported Binay’s observation. He further asked the DoE “why did you recommend and why did you conclude that it (UC MPPL) is capable if there is not yet an approved work program (for Malampaya)”? “

The sale of Chevron’s 45% stake was the first part of Udenna’s acquisition of Malampaya and this transaction which closed in March 2020 was valued at $ 565 million, while the second part was the purchase of $ 460 million from Shell’s stake to be finalized. by the end of the year.