The Udenna Group of Davao-based tycoon Dennis Uy defended subsidiary Malampaya Energy XP’s (MEXP) purchase of Shell Philippines Exploration B.V. (SPEX), saying it has the funds to operate the gas project.
MEXP particularly emphasized that it would have over Php10 billion in cash upon the share sale’s completion.
It also pointed out that senators’ questions in their hearing last week focused on a “very thin slice of information” regarding its financial capability to operate Malampaya. The firm further clarified that market capitalization is just one aspect of its ability to fund such deals.
The Uy-led firm said in a statement that MEXP’s acquisition of SPEX is fully-underwritten and funded via bank loans from its existing lenders, adding that full facility agreements have been provided to the relevant decision makers.
It likewise stressed that the acquisition is supported by international reputable financial institutions that saw MEXP’s capability to meet its obligations and to deliver value. Four foreign banks are reportedly helping Udenna finance its $460 million transaction with Shell, which the Uy-led firm announced back in May.
The deal caught the ire of senators after presenting documents showing that MEXP had only $100 (around Php5,000) in capital. The Senate probe comes as the DOE is reviewing the Shell-Udenna deal, which the Davao-based firm hopes to be approved by year’s end.
SPEX currently owns 45% of Malampaya. MEXP’s sister firm UC38 LLC bought the other 45% from Chevron in March 2020 for $565 million. The Chevron-Udenna deal was approved by the DOE last April, but is now under extensive review after Energy officials were grilled at the Senate over MEXP’s capitalization.
Photo from Shell global website.