DOE, Shell close to selecting financial advisor for IPO

The Department of Energy (DOE) and Pilipinas Shell Petroleum Corp. are in the process of selecting the so-called "third-party" financial advisor for the oil firm’s planned initial public offering (IPO).

Energy Undersecretary J.V. Emmanuel de Dios said Shell has already submitted the name of its chosen financial advisor.

"Shell has formally endorsed a financial advisor (a foreign investment bank). The DOE will have to agree. The idea is to have a mutually-acceptable party to address the issues confronting the proposed exercise," de Dios said.

According to de Dios, this "neutral" party will determine the structure and timing of the IPO.

He said DOE and Shell are working out a scheme that will allow the oil firm to offer its shares to the public despite prevailing market condition. "This is why we are getting a party that will review the condition of the market and determine a structure that will enable the firm to go public," he said.

One of the options that the financial advisor can explore, he said, is a proposal that would allow Shell to offer its shares to the public on a staggered basis or at least half of the expected 10 percent block as prescribed by law.

A Shell official, on the other hand, said the company submitted the name of the third party to DOE to indicate its willingness to go public.

"We have to agree on this mutually-acceptable party so we can move on with our planned IPO," the official said.

Under the Oil Deregulation Law passed in 1998, oil refiners should offer at least 10 percent of its share in the local stock market.

After Caltex Philippines Inc. gave up its refinery business, government’s attention has zeroed in on Shell. Petron Corp., the largest oil refiner in the country, was listed in the stock exchange in 1994.

The energy department had been threatening to penalize oil companies which have not complied with the IPO requirement of the oil deregulation law. Shell had been blaming the delay on the poor market conditions.

For the past years, Caltex and Shell have been asking for an extension period before they comply with the law. The two companies have also lobbied for an extension on or before the lapse of the supposed three-year period for the oil refiners to submit themselves to an IPO.