Ashmore Group to join Petron board by August

London-based fund manager Ashmore Group is expected to enter the board of Petron Corp., the country’s largest oil refiner, on August this year.

In a disclosure to the Philippine Stock Exchange, Petron said they expect the transaction between Saudi Arabia’s Aram-co Overseas Co. B.V. and Ashmore Global Special Situations Fund Ltd. Partnership for the sale of the former’s 40-percent stake in Petron to be completed soon. 

Based on the timetable of the transfer, Aramco is bound to complete its sale to Ashmore within 90 days after the expiration of Petron parent firm Philippine National Oil Co.’s right to make a counter-offer on the Aramco shares.

PNOC’s right expires 60 days after its receipt of the transfer notice from Aramco.

Since the transfer notice was received by PNOC on March 13,  its right to purchase the shares expired on  May 12.

 “Consequently, by the terms of the shareholders agreement, the period for completion of the transaction expires on Aug. 10, 2008 – or 90 days after May 12, 2008,” Petron said.

By August, the composition of Petron’s board is also bound to change.

Currently, both PNOC and Aramco each have four nominee directors on Petron’s board. Once the transaction has been completed, Aramco’s nominees will step down  and the Ashmore nominees will replace them.

PNOC earlier said it chose not to exercise its right of first offer for the Aramco shares, citing two main considerations.

One is government’s long-standing policy of privatization of state-owned commercial assets while the other is the cost to the government if it will make such a purchase, particularly at a time when it has more pressing priorities such as food security and essential infrastructure projects. 

PNOC’s decision effectively allows Aramco and Ashmore to proceed with the transaction. Ashmore offered Aramco $550 million for its 40-percent stake in Petron in mid-March. 

“While our partnership with Aramco is changing, it is not ending. We will retain our strong commercial ties with Aramco since our crude oil supply arrangement remains in place,” Petron chairman Nicasio Alcantara earlier said. 

He reiterated that Ashmore’s intention to purchase Aramco’s shares is a strong vote of confidence in the company’s operations and growth prospects, and the Philippines as an investment destination.

“We look forward to working with Ashmore representatives so we can immediately look at synergies that can enhance Petron’s business especially in the petrochemical sector. In this regard, we see unique opportunities in Ashmore’s wide network of global business relationships,” he said.

Ashmore is a leading investor in emerging markets, focusing exclusively on developing economies. It has been a long-time investor in the Philippines, with holdings in power generation, telecommunications and utilities.

Petron is the largest oil refining and marketing company in the Philippines. Its 180,000- barrel per day oil refinery produces a full range of petroleum products to supply nearly 40 percent of the country’s total fuel requirements. 

Through more than 1,250 service stations nationwide — the largest service station network in the country — we retail gasoline, diesel and kerosene to motorists.