THE Uniwide group faces the monumental task of fighting what could be its worst legal battle after a special hearing panel (SHP) of the Securities and Exchange Commission took away from it the debt relief that it has obtained from the SEC, and which it has been enjoying for 11 years.
Uniwide appealed the SHP ruling to the SEC’s five-man body only to meet another unfavorable decision. Finding the group beyond rehabilitation, SEC Chairman Teresita Herbosa and commissioners Ma. Juanita Cueto, Manuel Huberto Gaite, Eladio Jala and Antonieta Ibe ordered the liquidation of the six Uniwide companies.
Uniwide, which has been declared insolvent since 2002, still has an option left for it to evade liquidation: it could question the SEC ruling at the Court of Appeals. If it loses at the appellate court, it could prolong the legal battle by going to the Supreme Court.
“The company’s counsel is studying the options to be taken on this matter,” Jimmy Gow, president of the Uniwide group, said in a Philippine Stock Exchange (PSE) posting.
The SHP ruling dated January 10, 2010, and signed by Jocelyn Villar-Altamira, SHP head, Emmanuel Artiza and Armando Pan Jr., was bad news to the members of the Gow family who have hoped Uniwide Sales Inc., Uniwide Holdings Inc., Naic Resources and Development Corp., First Paragon Corp. and Uniwide Sales Warehouse Inc. could still be brought back to profitability.
The Gows were wrong in their belief and assessment of the financial viability of their companies, because lawyers Villar-Altamira, Artiza and Pan saw the opposite and decided instead to nullify the 11-year-old suspension of payments of the debts of the Uniwide companies. They justified their decision by the numbers culled from the Uniwide companies’ financial filings.
“The numbers clearly illustrate the financial hemorrhage endured by petitioners,” they said in describing Uniwide group’s huge losses totaling P5.4 billion from 2002 to 2009.
An old file not available to the public showed that the Uniwide group was only illiquid and could not raise cash to pay its liabilities. As of June 25, 1999, the six Gow-owned companies had combined total assets of P36.6 billion against total liabilities of P15.8 billion, which would translate to P2.3 of assets for every peso worth of liabilities, a ratio that suggested the group was solvent.
The same file also showed how each of the six Uniwide companies fared financially: Uniwide Sales had P9.1-billion assets against P2.7-billion liabilities; Uniwide Holdings, P12.8-billion assets, P2.9-billion liabilities; Naic Resources, P790.4-million assets, P788.9-million liabilities; Uniwide Sales Realty, P9.1-billion assets, P4.2-billion liabilities; First Paragon, the only one in bad financial shape, P285.6-million assets, P323-million liabilities and Uniwide Sales Warehouse Club, P4.5-billion assets, P4.8-billion liabilities.
What went wrong with the Uniwide group? The SEC panel did not analyze why the companies fell but the projections the Uniwide receiver submitted to the SEC to support the group’s rehabilitation could only be described as very ambitious.
How could a heavily debt-ridden group of companies recover and even project sales of P6 billion in 2002, which would increase over the years, and would finally peak at P11.6 billion in 2009?
The Uniwide group failed in meeting these consolidated sales targets except in 2002, when its revenues amounted to P6.6 billion. For the rest of the period, it reported the following: P6.3-billion actual sales vs. P7-billion projection in 2003; P4.4 billion vs. P7.7 billion in 2004; P3.2 billion vs. P8.3 billion in 2005; P711.9 million vs. P9.1 billion in 2006; P449.6 million vs. P9.8 billion in 2007 and P344.1 million vs. P10.8 billion in 2008.
Incidentally, Uniwide Holdings is listed on the Philippine Stock Exchange, but which its public stockholders have probably written off from their portfolio.
As of December 31, 2012, Uniwide Holdings had accumulated deficits of P7.5 billion including its losses of P147.3 million in 2010; P265 million in 2011; and P266 million in 2012. It reported capital deficiency of P2 billion in 2011 and P2.3 billion in 2012.
Because Uniwide Holdings is one of the six Uniwide companies that went bankrupt, it was last traded on January 18, 2010, when it traded throughout the session at P0.135. Trading on its shares remains suspended.
Uniwide Holdings listed Uniwide Sales Inc. as it biggest stockholder with 1.1 billion shares, or 44.3 percent, as of June 30, 3013. PCD Nominee Corp. holds for the public 928.7 million shares, or 36.2 percent, an ownership profile that makes Uniwide Holdings more public than others.