PNOC-EDC firms up price range for initial public offer

PNOC-Energy Development Corp. (EDC), the most profitable subsidiary of state-owned Philippine National Oil Co. (PNOC), has firmed up a price range for its planned initial public offering (IPO) this year.

Energy Undersecretary Melinda Ocampo told reporters that the PNOC-EDC board has approved the proposed price range submitted by the company’s financial advisor, CLSA Exchange Capital. Ocampo, however, declined to give the price range for the stock offer.

She said with the board approval, PNOC-EDC’s IPO is expected to start anytime this year.

It was earlier feared that the PNOC-EDC stock offering may be deferred to early next year due to some unresolved issues such as the consent to be given by its creditor bank, the World Bank (WB).

But Ocampo said they are optimistic the WB would be able to issue its consent soon. "That is the idea and we hope that the IPO will push through this year."

It was also learned that CLSA and the PNOC-EDC privatization team are currently working on the firm’s registration with the Philippine Stock Exchange (PSE).

PNOC-EDC expects to raise some $300 million from the IPO initially scheduled in September. This schedule was moved to November or December this year.

Proceeds from the IPO would be used for the modernization and upgrading of PNOC-EDC’s drilling facilities. Some $60 million from the proceeds would be utilized to pay portion of the company’s build-operate-transfer (BOT) contracts this year.

PNOC-EDC also want to generate new funds from the public offering to veer away from new borrowings.

PNOC-EDC, the geothermal and renewable energy development arm of PNOC, has a present net book value of $800 million to $1 billion. It expects its earnings to reach more than P10 billion this year from P8.6 billion in 2005.

In May this year, the PNOC-EDC board approved the privatization blueprint which will allow the sale of 30 to 40 percent of the company through an IPO.