Petron plan to sell P10B in preferred shares OKd

Leading oil distributor and refiner Petron Corp. has obtained the approval of the Securities and Exchange Commission for its plan to sell as much as P10 billion worth of perpetual preferred shares.

Based on SEC documents, Petron will sell preferred shares at P1,000 per share.

The base offer is worth P7 billion but another P3 billion worth of shares were earmarked for oversubscription in case of strong demand.

Net proceeds from the offering will be used to redeem an earlier series of preferred Petron shares which were issued at P100 per share. The outstanding preferred shares are “callable” by March 5 next year or at any dividend payment date thereafter. This means that the preferred shares can be redeemed by Petron prior to its maturity.

The earlier issuance of preferred shares had raised funds to support Petron’s investment requirements, particularly for its refinery and marketing operations as well as for general corporate purposes.

The upgrade of Limay Refinery, in particular, used up a lot of earlier proceeds.

By issuing the new series of preferred shares, Petron will be refinancing the old instruments.

BDO Capital & Investment Corp., China Banking Corp., RCBC Capital Corp., SB Capital Investment Corp. and Standard Chartered Bank were mandated as joint lead managers for this offering. Each bank has committed to sell P1.4 billion worth of these preferred shares each.

Petron earlier reported the completion of its $2-billion upgrade of its refinery in Bataan.

The company said the upgrade would jack up its production. Its gasoline output, alone, is projected to double from the current 18,000 barrels per day to 36,000 barrels per day.