Sale of PNOC-EC to be delayed due to market slump

The privatization of PNOC-Exploration Corp. (PNOC-EC), the oil and gas development arm of the state-run Philippine National Oil Co., will likely be delayed due to poor market condition.

"We are still studying it (public offering), but it’s a matter of timing. We want to maximize the proceeds from the offering,"PNOC president Thelmo Cunanan said.

With the current bearish stock market performance, Cunanan said it is better to wait for a while than "suffer the value of the shares". The PNOC chief did not say for how long they will push back the planned offering.

The PNOC-EC earlier said it intends to proceed with its planned public offering in the first quarter of 2003.

Late last year, PNOC vice president and spokesman for PNOC-EC privatization Alfredo Parungao said the company’s financial advisor ING Barings had suggested to wait until the first quarter of this year to "feel the market".

PNOC-EC was supposed to offer its shares to the public through an initial public offering (IPO) or a strategic sale in the last quarter of 2002. But due to weak market, the company decided to suspend the plan following the advice of ING Barings.

As part of its preparation for the IPO, PNOC-EC has formally formed a new subsidiary PNOC Malampaya Production Corp. (PNOC-MPC) to handle the 10-percent stake of EC in the $4.5-billion Malampaya Deep Water Gas-to-Power project in November 2002.

The creation of PNOC-MPC will pave the way for the planned IPO of 49 percent of the 10 percent share of PNOC-EC in the Malampaya consortium within this year. The assignment of PNOC-EC’s 10 percent participating interest in Service Contract No.38, its title, interest and obligations under other related contracts, and all or a potion of its associated-debt to its wholly-owned PNOC-MPC," PNOC-EC corporate secretary Elpidio Gamboa Jr. said in a disclosure to the Philippine Stock Exchange.

Some $175 million worth of debts of PNOC-EC related to the Malampaya share will also be transferred to PNOC-MPC.