Petron Corp. To Raise Capital For Retail Expansion, Refinery Upgrade

abarrelfullabarrelfull wrote on 26 Sep 2013 13:44

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Monday, february 15, 2010

The country’s leading oil refining and marketing company Petron Corporation said that it plans to raise P5 billion by issuing 50 million perpetual preferred shares. The issue has an oversubscription option for another 50 million shares. The company said that the funds will be mainly used for its retail network expansion program and a refinery upgrade aimed at improving efficiency and reliability.

“The proceeds from our issuance will fund our capital expenditures with the goal of enhancing our market dominance and ensuring Petron’s growth momentum for many years to come,” Petron Chairman and CEO Ramon S. Ang said.

Mr. Ang said that from January 2009 to January 2010, the company has opened 200 new Petron service stations across the country bringing its total service station count to 1,463—the largest retail network in the industry. Of the 200 Petron service stations opened in the last year, 84 are located in Luzon, 48 in Visayas and 68 in Mindanao.

“We have programmed the construction of more service stations over the next few years to strengthen our core business and bring Petron closer to Filipino consumers,” Mr. Ang added.

Petron is also looking at upgrading its power-generating system at its 180,000 barrel-per-day Bataan refinery. The planned upgrade will ensure a more reliable and economical power supply at a time when the company is studying the construction of additional facilities.

“Our initial studies show that the planned upgrade in our power-generating system will result in cost-savings amounting to around P1 billion annually,” Mr. Ang concluded.

In the past five years alone, Petron has invested over $400-million in its Bataan refinery. In early 2005, it commissioned an Isomerization Unit and Gasoil Hydrotreater to meet the stringent requirements of the Philippine Clean Air Act. In 2008, it inaugurated a Petro Fluidized Catalytic Cracker and a Propylene Recovery Unit allowing it to convert more fuel oil into white products (e.g. LPG, diesel and gasoline) and enabling the production of the valuable petrochemical feedstock propylene. Last year, a Benzene, Toluene and Xylene unit was completed which allows the production of more environment-friendly Petron gasolines, more stringent than the government mandated Euro 2 standard. This unit likewise allows additional petrochemical feedstock production.

The Petron perpetual preferred shares, with a par value of P1.00 per share and a price of P100.00 per share, are cumulative, non-voting, non-participating, non-convertible and peso-denominated. The company will offer the shares beginning Feb. 15 - Feb. 26, 2010 and this will be listed on the Philippine Stock Exchange on March 5, 2010.

The annual dividend rate of the preferred shares is 9.5281%. If declared by the Board, Petron has an option to redeem the shares on the fifth anniversary from the listing date or any dividend payment date after. If the company doesn’t redeem on the fifth year, investors will enjoy a “step-up” rate.

All interested investors can do this through their brokers or they can go to participating underwriters. Individual citizens and residents in the Philippines will subject to a 10% withholding tax. The shares can also be owned by any person, association or corporation regardless of nationality. The joint lead managers/underwriters are BDO Capital, BPI Capital, ING, RCBC Capital and UnionBank.

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