https://www.rappler.com/newsbreak/i...growing-business-empire-debt-year-opener-2019
From the article: "Rappler talked to 4 experts in finance and business and they all sounded the alarm: Uy’s balance sheet is not looking good."
"“Medyo tagilid (it doesn’t look good), a quick look at what it earned versus its liabilities and you can just say that it’s a very weak balance sheet,” a finance expert who requested anonymity said.
Another market observer was also wary of Udenna’s figures, especially during a period of rising interest rates.
"Uy and Udenna have a lot to prove and a lot of catching up to do, and the figures alone are telling that he may be spreading himself too thin," the source said.
Uy was able to acquire companies through bank loans.
Udenna's interest-bearing loans in 2017 reached P85.8 billion, a 200% jump year-on-year."
"An investment banker said that banks usually look at several indicators like the debt-to-equity ratio, which is computed by dividing the company's liabilities by its equities.
The ratio is used to gauge the extent to which a company is taking on debt as a means of leveraging its assets. A high ratio is often associated with high risk.
Udenna's debt-to-equity ratio in 2017 stood at 3.41:1.00, which, analysts said, was very high.
Big bank loans usually have a threshold of at most 2.30, while some allow up to 3.10.
Udenna has at least 3 loans that have breached the debt-to-equity limits of loan terms, yet they were still granted the funds due to their ability to pay off loans on time and good relationships with banks.
However, the investment banker said that these requirements are not really strictly enforced in practice.
"It's a gray area, and banks are betting on Uy. It helps that he's close with Duterte," the banker said."
"Rappler asked one businessman with the deepest pockets in the country whether he is worried about Uy's rise. He simply said, "yes and no." "Exciting. But we're keeping an eye on the red flags because they might affect us too," he said. "
https://www.philstar.com/business/2019/08/01/1939495/udenna-loans-rise-p85-b-2018
"Udenna Corp., the fast-growing holding company of Davao-based businessman Dennis Uy, incurred interest bearing loans of P8.5 billion as of the end of 2018, higher than the P5.46 billion recorded in 2017.
However, current interest bearing loans alone declined to P993.9 million from P5.45 billion a year ago, while non- current interest-bearing loans grew to P7.59 billion from P2.4 million.
Of the total loans, Udenna has a P7.97 billion 10-year omnibus loans and security agreement with Sy-owned Banco de Oro with the interest rate ranging from 6.34 to 6.58 percent, according to a regulatory filing.
Read more at https://www.philstar.com/business/2019/08/01/1939495/udenna-loans-rise-p85-b-2018#3QW6xDJoayG9QlAd.99"
Remember, loans have to be repaid.
