SEC approves Petron’s P10B preferred shares offering

MANILA, Philippines – The Securities and Exchange Commission (SEC) en banc approved the P10-billion ($223.21 million*) preferred shares offering of Petron, the country’s largest oil company.

Petron will offer 7 million worth of preferred shares with an oversubscription of 3 million shares for over allotment at an offer price of P1,000 per share ($22.32), according to a filing with SEC.

Petron Corporation, a company controlled by San Miguel Corporation, tapped BDO Capital and Investments Corp.; ChinaBank; RCBC Capital Corp.; SB Capital; and Standard Chartered Bank as the joint lead managers for the preferred shares offering.

Proceeds from the sale of preferred shares will be used to redeem the P10 billion outstanding preferred shares which are callable starting March 5, 2015. Callable preferred stock is advantageous to an issuer, since the issuer can lower the issuer’s cost of capital if interest rates decline or if it can issue preferred stock later at a lower dividend rate.

The preferred shares are non-participating and non-convertible to common shares.

Petron is also currently embarking on the $2-billion refinery master plan 2 to allow the full conversion of the Bataan refinery’s fuel oil production to higher-margin products such as gasoline and diesel.

The conversion would allow the facility to maximize its 180,000 barrel-per-day production capacity and ensure fuel supply for the country’s growing demand.

Fuel demand in the country rose 5% in 2013 and is expected to increase in the coming years.

Petron posted a net income of P3 billion ($67.08 million) in the first half, up from P1.1 billion ($24.58 million) over the same period last year, attributed to higher sales in both Philippine and Malaysian operations.

Combined sales also increased 8% to 43.1 million barrels in the 6-month period from 39.8 million barrels last year.

Petron’s consolidated sales revenues reached P258.2 billion ($5.76 billion) – 18% higher than P218.8 billion ($$4.89 billion) in the first half of last year. – Rappler.com

($1 = P44.79)