Caltex may still list shares in stock market

Caltex Philippines Inc. may still list its shares in the local stock market despite the move to convert its refinery into an oil storage terminal, a ranking energy official said.

"We have to coordinate with other agencies to see if Caltex is still bound to conduct an initial public offering (IPO)," Energy Secretary Vincent S. Perez said.

Under RA 8479 or the Oil Deregulation Law, "any person or entity engaged in oil refinery business shall make a public offering through the stock exchange of at least 10 percent of its common stock within the period of three years from the effectivity of the Act or the commencement of its refinery operations."

Caltex’s IPO, as well as that of other market players such as Shell, should have been done in Feb. 2001 but has been repeatedly extended due to poor market conditions at the local bourse.

But Perez said Caltex has another business concern, CALSERV, which may be covered by a law that will require an IPO.

CALSERV is engaged in direct retailing through eight retail stations and convenience stores under the Caltex and Star Mart brands. It has also opened three Star Mart cafes to tap into an emerging consumer lifestyle.

Caltex country chairman Timothy Leveille, on the other hand, said they will still consult the Department of Energy (DOE) on whether they will no longer be mandated to list their shares in the stock market.

Leveille, however, pointed out that the company is prepared to do whatever the law dictates. "Caltex will always follow the legal requirements" he said.

The Caltex official stressed that "the IPO is not a factor in their decision to convert their operations in the Philippines."

Lately, there has been pressure for Caltex and Pilipinas Shell Petroleum Corp. to list their shares in the Philippine Stock Exchange (PSE).

The DOE has been seeking the Department of Justice (DOJ)’s opinion whether the government can now enforce the provision of RA 8479.

Caltex and Shell have been using a previously issued DOJ opinion as a shield to skirt the IPO provision of the Oil Deregulation Law.

The DOJ opinion said "based on the prevailing economic conditions, it is expected that an IPO at this time may well fall short of the norms of a successful offering both in terms of pricing and distribution if undertaken within the period."

"There is no sanction provided in the law for non-compliance with the IPO requirement within the prescribed period," the DOJ said, noting that the intention of the law is "to broaden the base of ownership" of oil companies, and this intention or purpose of the law will definitely be served by construing the three-year period liberally.

The DOJ opinion released in Feb. 2001, just in time for the expiration of the supposed IPO schedule set by law, specifically states that "the conclusion that the intention of the law is to broaden the base of ownership of oil companies and that the three-year period fixed therein should be construed liberally, hence, the IPO could still be conducted after the lapse of the said three-year period."