PNOC-EC eyes offering of shares in 4th quarter

MANILA, Philippines—PNOC Exploration Corp., the upstream oil and coal arm of state-run Philippine National Oil Co., is targeting to offer 218 million primary shares within the fourth quarter this year to comply with the mandatory 10-percent minimum public float.

In a briefing following the company’s stockholders’ meeting on Monday, PNOC-EC chief of staff Silvestre Punsalan III said 90 percent of the 218 million shares would be offered to institutional investors while the remaining 10 percent would be offered to retail investors.

It has also been agreed that PNOC-EC’s financial adviser, Union Bank of Switzerland AG (UBS), will take up any shares that will not be sold in the market.

The company’s public float stands at only 0.21 percent while all the remaining shares are held by the government through PNOC. The company thus needed to sell 9.79 percent of its total shares to comply with the 10-percent minimum public ownership rule of the Philippine Stock Exchange (PSE).

According to Punsalan, PNOC-EC was expected to receive by September this year the evaluation being conducted by its financial adviser as well as the approval from the PSE. PNOC-EC also needs to secure the approval of the national government. Once all approvals are received, the company will also be conducting a road show before starting the stock offering.

“We are issuing primary shares. These are ‘B’ shares so these could be sold not only to the domestic but also to the international market. In fact, by October this year, once approved by the Department of Finance and the Privatization Management Office, we will be going on a 10-day road show, which will include Singapore, Hong Kong and London, to offer our primary shares,” Punsalan explained.

Punsalan admitted that there was still a chance that PNOC-EC’s planned offering would not push unless the national government would deem as acceptable the indicative price for the 218 million shares and as favorable to the current market conditions.

“If those two conditions are met by October, then most likely we will be executing the [share issuance] because we have the December deadline. But it is always a function of those two, so therefore there is a possibility that if market conditions are not favorable, the DOF may just decide to delay until we have a better market environment,” Punsalan said.

Proceeds from the planned issuance may be used to help fund the company’s exploration program between now and 2016.

PNOC-EC chairman Gemiliano Lopez Jr., in his speech on Monday, said the company has “already adopted a work program for oil, gas and coal development and  exploration from 2012 to 2016, involving an estimated investment cost of more than P20 billion.”

“This includes the establishment of mine-mouth power plants to produce electricity and the distribution of CNG [compressed natural gas] for public transport,” Lopez said.

Aside from having more than P1 billion in cash, the company has a standby credit line from various institutions for another P19 billion.