Petron OKs peso bond sale to finance expansion

Petron Corp., the country's biggest oil refiner, announced Thursday that its board has approved the issuance of peso bonds to finance expansion plans and other capital expenditures. In a report submitted to the Philippine Stock Exchange, Petron assistant vice president Joel Angelo Cruz said the Petron board has approved plans to issue peso bonds which will be settled in US dollars. This developed after the successful issuance of the government’s peso overseas bonds earlier this month. Petron, partly owned by San Miguel Corp., did not disclose the amount of peso bonds. A few weeks ago, however, Bloomberg reported that insiders said the company was seeking Central Bank permission for a benchmark-size sale. Benchmark typically means at least $500 million. Petron president Eric Recto earlier said the bonds would be an option to finance the second phase of its Refinery Master Plan, which would cost $1 billion. “We are looking at expanding the refinery to make it more efficient and to process a much bigger percentage of crude," Petron chairman and CEO Ramon Ang said. Petron can issue new equity to raise the $1 billion it needs for the refinery expansion. The company can also form a joint venture with the new partner or sell primary and secondary shares. Petron’s Bataan refinery produces a full range of petroleum products to supply nearly 40 percent of the country’s total fuel requirements. The company currently owns over 1,500 retail stations in the country. Foreign investors sought Petron is also planning to take in a partner to raise money for the refinery upgrade. The company has confirmed that talks were ongoing with foreign investors including Thailand’s PTT Public Co. Ltd. “We’re talking with a lot of companies. If we can invite foreign investors, we can offer as much as 40 percent to them," Ang told reporters earlier. Recto said Petron is looking for investors with “the financial muscle and technical capability." The oil refiner recently got approval from the Board of Investments to build a P10.84 billion 70 megawatt (MW) solid fuel-fired power plant in Limay, Bataan. Petron, controlled by San Miguel Corp. and SEA Refinery Holdings B.V., a unit of the Ashmore Group, is the largest oil refining, distribution and marketing company in the country. Government succeeds with global bonds The Philippine government raised $1 billion last month from its first global sale of peso bonds, pricing 4.95 percent notes due in January 2021 to yield 5 percent after receiving investor orders for 13 times the debt on offer. – DM/VVP, GMANews.TV