Phoenix aims to raise up to P7B via follow-on offering

The Philippine Stock Exchange (PSE) has approved a plan of Davao-based businessman Dennis Uy-led Phoenix Petroleum Philippines Inc. to raise as much as P7 billion from a public offering of a new series of perpetual preferred shares.

Based on the preliminary term sheet posted by the PSE, the follow-on offering would consist of five million primary preferred shares at an offer price of P1,000 per share.  In the case of strong demand, the company can upsize the offering by two million preferred shares more.

The offering—the fourth series in Phoenix’s preferred shares issuance—will run from Oct. 21 to 29 while listing on the local stock exchange will be on Nov. 7 this year.

These securities are cumulative, nonvoting, nonparticipating, nonconvertible and redeemable peso-denominated perpetual preferred shares.

China Bank Capital Corp. was mandated as the sole issue manager, joint lead underwriter and sole book runner.  Another joint lead underwriter is PNB Capital and Investment Corp.

Phoenix will use net proceeds from the offering to partially finance its capital expenditures and other general corporate purposes.

While the upcoming preferred shares have perpetual tenor, it will be priced based on benchmark three-year bonds and will have a synthetic maturity of three years.  Otherwise, Phoenix will have to pay a higher interest rate.

The initial spread over the applicable benchmark rate, in line with the equivalent of the average of the yield for three-year Philippine government peso-denominated bonds, will be 350 to 450 basis points.

If the offer rates are not redeemed by the third anniversary, the dividend rate shall be adjusted to the higher of the prevailing dividend rate or the dividend rate equal to the step-up benchmark rate plus the initial spread plus 500 basis points.

Currently valued by the stock market at P15.5 billion, Phoenix is engaged in the trading of petroleum products on wholesale and retail basis and operating of gas stations, oil depots, storage facilities and allied services.

As of the end of September this year, Phoenix has built 650 operating retail stations nationwide, up from 600 at end-2018.