By Danessa Rivera (The
Philippine Star) | Updated September 6, 2016 - 12:00am
MANILA, Philippines - Phoenix
Petroleum Philippines Inc. is divesting from its shipping and industrial park businesses
as it decided to focus on its core business of petroleum distribution.
In a disclosure to the Philippine
Stock Exchange, Phoenix Petroleum said its board approved the sale of
wholly-owned subsidiaries Chelsea Shipping Corp. (CSC) and Phoenix Petroterminals
and Industrial Park, Corp. (PPIPC) to the Udenna Group, the effective parent
and majority stockholder of the company.
The sale, estimated to cost P3-3.5
billion, is still subject to third-party valuation and fairness opinion.
The company said the sale will
significantly allow it to allocate all of its resources to fuel its aggressive
growth in its core business and the distribution of petroleum products
nationwide.
Proceeds will allow Phoenix
Petroleum to pay off existing debts to bring down interest-bearing
debt-to-equity ratio from 1.69:1 at end- 2015 to 0.92:1 by end-2016, save
P150-160 million a year in interest expense starting 2017 after reduction in
interest bearing debt, and generate P500-700 million in non-recurring gain this
year, Phoenix Petroleum vice president for external affairs Raymond Zorilla
said in a text message.
Zorilla said CSC and PPIPC are not
part of the company’s core competencies and are not related to its main
business, which is the marketing and sale of petroleum products.
“CSC and PPIPC are backward
integrated businesses at best. As such, they have divergent risks, potentials
and capital expenditure requirements from that of Phoenix,” he said.
CSC and PPIPC represent about eight
percent of the company’s consolidated assets as of end-2015, with an estimated
market value of about P7 billion.
In the same disclosure, Phoenix
Petroleum said it also got board approval to increase the maximum amount for
the share buyback program currently being implemented from P250 million to P450
million.
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