Dennis Uy’s Dennison Holdings Corp. and Manuel V. Pangilinan’s PXP Energy Corp. intend to seal an investment deal in March 2019.
In a regulatory filing submitted on Thursday by PXP Energy finance controller Mark Rilles, the PXP Energy said it has agreed with Dennison Holdings on December 26 to accelerate the subscription payment to PXP shares not later than March next year.
Dennison is expected to make a downpayment equivalent to 1 percent of the total subscription price of P4.03 billion on or before January 7, 2019.
“In the event Dennison fails to pay the entire subscription price on or before March 31, 2019, the entire amount of the downpayment shall be forfeited in favor of PXP and the subscription agreement shall be terminated at the option of PXP,” the company said.
However, the likelihood of defaulting on the deal seems far-fetched at this point.
PXP president Daniel Stephen Carlos told GMA News on the deal is on track to be fully consummated by March 2019.
“Yes, that’s correct,” Carlos said when asked if PXP Energy and Dennison agreed to complete the deal early next year.
On October 26, Dennison signed an equity subscription deal with PXP. The deal covered 340 million common shares in the energy exploration company at P11.85 per share for a total subscription of P4.03 billion.
The price represents a 20-percent discount on the 90-day volume weighted average price of PXP shares on the Philippine Stock Exchange, with the subscription equivalent to a 14.78-percent ownership interest in PXP.
Once the deal is consummated , Dennison is entitled to at least one seat on the PXP board and nominate the vice chairman of the board as well as other rights of a shareholder.
The subscription agreement also gives preferential rights covering Phoenix Petroleum—Uy’s petroleum retailer.
This means that PXP may acquire 49-percent equity, interest, or participation in the planned liquefied natural gas (LNG) terminal and gas fired power plant of Phoenix Petroleum and China National Offshore Oil Corp. (CNOOC).
This is subject to CNOOC’s approval and consent.
Tanglawan Philippines LNG—the joint venture between Phoenix Petroleum and CNOOC—has submitted a proposal to the Department of Energy for an LNG terminal project in Batangas. The facility has a capacity of 5 million metric tons a year, and will cost around $1 billion to $2 billion.
The DOE is pushing for an LNG terminal facility to prevent consumer electricity rates from spiking once the reserves of Malampaya natural gas facility is depleted some 10 years from now.
Malampaya supplies the LNG requirements of three power plants with a combined generating capacity of 2,700 megawatts in Luzon—enough to meet up to 30 percent of Luzon’s electricity needs, or about 20 percent of the country’s total electricity requirements.
PXP noted Philex Mining Corp. has paid its 25 percent downpayment or P770.25 million in connection with a subscription agreement on October 26. Philex Mining has agreed to subscribe to 260 million common shares of PXP at P11.85 per share for a total subscription of P3.081 billion.
The subscription agreements with Dennison Holdings and Philex Mining are part of PXP’s P7.11-billion fund raising to finance exploration activities and other oil assets in the Philippines and in Peru, and to repay cash advances from Philex. —VDS, GMA News