Secondary share-sale of PNOC-EC put on hold

Manila Times.net

THE government put on hold Philippine National Oil Co.-Exploration Corp.’s (PNOC-EC) planned secondary offering.

Department of Energy (DOE) Secretary Jose Rene Almendras said the offering was suspended to make way for a study to determine if it would be in the best interest of the public to do so.

“We are accountable to the shareholders and in this case the
shareholder is the Republic of the Philippines. It will be unfair to the Republic of the Philippines if we sell the shares at a price lower than our valuations simply because that’s the ongoing market price,” he said.

PNOC-EC holds interests in eight petroleum service contracts and five coal operating contracts located in various parts of the country. Its biggest cash cow is a 10-percent stake in the Malampaya field, the country’s largest natural gas production facility, from which the company earns around P2 billion a year.

PNOC-EC is the upstream petroleum and coal arm of state-owned PNOC, which controls 99.79 percent of the former. The remaining shares are publicly-held.

Gemiliano Lopez, PNOC-EC chairman and chief executive officer, earlier said the company is preparing for a follow-on offering to meet the Philippine Stock Exchange’s rule of a minimum 10 percent public ownership for listed companies, subject to the approval of the company’s board.

The company had hoped to use the proceeds from the secondary offering to help fund its expansion activities this year.

PNOC-EC is looking at a budget of P5.25 billion, including a capital investment of P4.55 billion, capital expenditures worth P167.81 million, and operating expenditures amounting to P572.70 million.

Almendras, who also chairs PNOC, said the additional listing would leave the public short-changed given the potential of PNOC-EC’s assets, which churned out P3 billion in dividends to the government last year.

He said the government will ask the Securities and Exchange Commission (SEC) to give it more time to decide on any additional share offering.

“It is not a privatization, it is a decision to either comply with the SEC or not. So the option is do you comply, and continue to be listed or do you de-list?” he added. EUAN PAULO C. AÑONUEVO