Government not inclined to sell 40% Petron

June 17th, 2008 by Site Administrator

UNLESS beneficial and advantageous to the public and stakeholders and at a premium, the government is not keen on taking advantage of the possible tender offer by London-based Ashmore group’s SEA Refinery Holdings or selling its stake in Petron Corp.

“Ashmore bought the 40 percent of the Petron shares held by Saudi Aramco—now, when you do that, you’re mandated to issue a tender offer to all the other shareholders,” Energy Secretary Angelo Reyes told reporters Monday. The government, being the owner of the 40-percent stake through Philippine National Oil Co. (PNOC), will not take advantage of the tender offer—since the government does not think it’s a good idea, Reyes said. The government, he added, is better off with keeping the 40 percent.

“If we sell the balance of the 40 percent to Ashmore under this tender offer, they [Ashmore] will have 80 percent and that is effective control, and we think and I think that if ever we should do that, it should be sold at a premium—since we’re turning over control. So it should be sold at a premium if the control goes with the sale,” Reyes said. With respect to the government selling its shares, Reyes said they always sell under conditions most beneficial to the government and the public. “The Gokongwei offer was to buy the Aramco shares, and then they said they want to buy the government shares. It’s still pending. We will not accept any offer that is not the most beneficial and advantageous to shareholders,” said Reyes.

Owing to fiscal constraints and a policy that negates reverse privatization, PNOC earlier waived its right to purchase the 40-percent stake of Aramco Overseas Co. B.V. (AOC) in local refiner Petron Corp., giving instead the green light for Aramco to sell its shares to Ashmore. PNOC, which separately owns 40 percent of Petron—with the remaining 20 percent of shares publicly traded on the Philippine Stock Exchange (PSE)—had, in effect, waived its right to first offer.

The approval of the sale to Ashmore by AOC triggers a mandatory tender offer by Ashmore for some of the shares held by the public, as stipulated in the Securities Regulation Code.

Rey David, president of the Development Bank of the Philippines (DBP), which advised the energy department on this transaction, earlier said they consider Ashmore as adding value to Petron.

“And with that value to Petron, we recommend that the PNOC should not interpose any objection to the sale. We find that Ashmore will be an acceptable partner with their intention to strategically and financially grow Petron’s business,” said David, adding that Ashmore has also expressed interest in spending more for capital expenditure.

The DBP official said the sale of Aramco shares to Ashmore through the PSE will be consummated some time in July. David said they have discussed everything with other parties that have expressed interest over Petron’s shares—including Gokongwei’s JG Summit Holdings Corp.; Morgan Stanley representing Thai Oil, PTT of Thailand, and the Gaisanos of Cebu.David quickly added that PNOC has yet to decide on whether it will sell the government’s 40-percent stake through PNOC in Petron.

Paul A. Isla, BusinessMirror