PNOC-EC setting up new firm in preparation for IPO

The PNOC-Exploration Corp., the publicly-listed oil and gas subsidiary of state-owned Philippine National Oil Co. (PNOC), is setting up a new company in preparation for its planned public offering.

Energy Secretary and PNOC chairman Vincent S. Perez told reporters that under the privatization plan, EC will sell its 10-percent stake in the $4.5-billion Malampaya Deep Water Gas to Power project amounting to more than $300 million.

According to Perez, EC is now in the second phase of privatization process where the company will hire underwriters to handle the public offering of the newly-created subsidiary. "We are now in the process of selecting underwriting placement agents for the new PNOC subsidiary," Perez said, adding the new subsidiary may be called PNOC-Malampaya.

Based on the plan, the 10-percent share of EC in the Malampaya project will be transferred to the new firm as well as the debts (about $175 million) borrowed by EC to fund its stake in the said project.

The energy chief said they are currently coordinating with the officials of the Philippine Stock Exchange (PSE) to fast track the listing process.

He said they are looking at the possibility of selling to the public at least 49 percent of the new subsidiary before the end of the year.

Perez said they have solicited the help of the Department of Finance (DOF) Privatization Council to assist in the listing of the EC in the stock market.

Late last month, EC selected Hong Kong-based CLSA (an arm of investment bank Credit Lyonnais) as its financial advisor for the sale of its shares to the public.

PNOC president Thelmo Cunanan said CLSA bested four other financial firms: ABN-AMRO, INC, SGV & CO., and ATR-Kim Eng. CLSA is an international financial firm founded and holds its office in Hong Kong. It was voted as Best Brokerage House in Asia by Finance Asia and Best Foreign Securities House in China by Euromoney. CLSA’s economics team has consistently ranked No. 1 in major polls including Asiamoney, Institutional Investor and Reuters.

The PNOC expects to raise about $1 billion from the sale of its share in the exploration firm. The government has been considering at least three options in disposing the assets of EC. The first option is for the company to sell its share in the Malampaya project. Second is to relist its share in the stock market and the third is a combination of the two schemes.