Petron plans to raise more funds via securities issuance

Petron Corp., the country’s largest oil refiner and distributor, is set to issue dollar-denominated securities to raise additional funds, on top of the $500 million it raised in February this year.

In a disclosure to the Philippine Stock Exchange on Wednesday, Petron said it “expects to offer additional securities which, upon issuance, will be fungible and consolidated with the securities issued by the company on Feb. 6, 2013, to form a single series.”

Petron was able to raise $500 million from the sale of perpetual bonds. It priced the hybrid capital notes at 7.5 percent a year after a “well-received” road show in Asia and the United Kingdom.

To serve as joint bookrunners and lead managers for the new issuance will be HSBC, Deutsche Bank, Standard Chartered Bank and UBS.

In a text message, Petron chairman Ramon S. Ang said the proceeds from the issuance would be used for the company’s expansion program. He, however, did not indicate the amount the oil company was planning to raise from the reopening of the dollar securities.

For this year, Petron has earmarked P51.9 billion for its consolidated capital expenditures, as it moves to further strengthen its foothold in the local and Malaysian oil markets.

Of the planned capital spending, 72 percent, or P37.37 billion, would be allocated for the implementation of the Refinery Master Plan 2 (RMP-2), which is aimed at upgrading the oil firm’s 180,000-barrel-per-day refinery in Limay, Bataan.

Another 13 percent, or P6.75 billion, will be used for the company’s cogeneration power plant project, which will generate 140 megawatts by 2014.

The $500-million facility will serve the oil refinery’s current and expected future electricity and steam requirements and is expected to reduce the company’s refining costs.

Another 2 percent (P1.04 billion) will be earmarked for retail service station network expansion in the Philippines; 1 percent (P519 million) for enhancing the facilities at the Port Dickson Refinery; and 3 percent (P1.56 billion) for the rebranding and refurbishing of Petron’s retail service station network in Malaysia.

Petron did not indicate where the remaining 9 percent would be spent.