PNOC-EC still firming up choice of privatization mode

State-owned PNOC-Exploration Corp. (PNOC-EC) is still firming up what mode to be used for its privatization.

In a presentation to President Arroyo last Monday, PNOC-EC said they are eyeing at least three methods of privatization – public offering, strategic sale and private placement.

The company said an additional public offering at this time is timely, given the favorable stock market performance coupled with the positive sentiment of international and domestic investors.

“An additional public offering is a mode of sale for companies already listed on an exchange such as PNOC-EC on the PSE, which will allow the company and its shareholders to raise funds through the capital markets,” the company said.

Issuance of additional shares, it said, will also command a relatively shorter time of four to six months to complete the offer.

This mode, according to the company, will also add liquidity which will further increase the value of PNOC-EC’s shares.

PNOC-EC, the oil and gas exploration arm of the state-run Philippine National Oil Co. (PNOC) said the company’s privatization is necessary to achieve various objectives.

The company said it needs to generate funds through the said privatization effort to fund various projects such as the development of Camago-Malampaya oil leg; development of oil and gas field in offshore Mindoro and Ragay Gulf; Oil and Gas exploration projects (domestic and overseas); development of natural gas downstream infrastructure projects; overseas coal project in Indonesia; and development of integrated coal min-mouth power plant project in Isabela.

According to PNOC-EC, the Department of Finance has also identified the company as one of the government-owned and controlled corporations which is up for privatization.

It said this requirement was a condition for the approval of PNOC-EC’s participation in Service Contract No. 38-Malampaya project and the granting of guarantee for a related three-year syndicated loan in March 2001.

The sale of the PNOC-EC’s shares, it said, is also part of the government’s way to generate funds for the National treasury.

Based on the proposed timetable of the public offer, it would take one to two weeks to start the drawing up of the privatization plan and valuation.

The proposed timeline would also allow PNOC-EC to undertake the due diligence and create offering circular and get approval of the stockholders within six weeks.

Listing application of the sale of new shares, getting necessary approval from regulators, pre-marketing, management roadshow, pricing allocation to international investors and domestic listing will be done based on the proposed timetable of 14 months.

Earlier, PNOC-EC said it expects the secondary offering of its shares to be undertaken by yearend or first quarter of next year.

The sale of PNOC-EC would include its 10 percent share in the consortium that is operating the $4.5 billion Malampaya deep water gas to power project in Northwest Palawan.

There are at least six firms that have signified interest to become the financial advisor for the sale of the PNOC-EC.

Previously, PNOC-EC had raised the possibility of issuing an additional 38.3 percent of its shares through a secondary offering at the stock exchange this year to raise funds for its projects in the pipeline.