Phoenix Petroleum approves issuance of P500-M convertible notes to BDO

MANILA, Philippines - Davao-based Phoenix Petroleum Philippines Inc. has secured shareholder approval to issue P500 million worth of corporate notes to BDO Unibank Inc.

The development allows the SM Group of mall and banking tycoon Henry Sy Sr. to gain a minority stake in the oil firm.

“Stockholders of Phoenix Petroleum approved the issuance of P180 million warrants in relation to the issuance of P500 million convertible notes,” the company said in a disclosure to the Philipine Stock Exchange.

“The P500-million registration-exempt convertible corporate note with warrant offering amounting to P180 million is part of the company’s plan to raise long-term capital, finance capital expenditures for 2012 and refinance short term debt,” it added.

A warrant gives investors the right to buy shares from the issuer at a specific price within a specific timeframe.

Phoenix Petroleum plans to double its service stations to at least 500 in the next five years through a nationwide expansion program.

The new retail stations will allow the company to maintain its position as the top independent oil firm in the country.

In July, Phoenix Petroleum and BDO signed the deal for the convertible debt with warrants, with BDO Capital as the sole arranger.

BDO’s conversion of the debt papers to shares will mark the entry of SM Investments Corp. (SMIC) into the oil firm.

SMIC chief finance officer Jose Sio said however, that the group has no plans of venturing into the fuel retail business, noting that it continues to focus on its core businesses.

SMIC is into mall operations (SM Prime Holdings Inc.), retail (SM Retail Inc.), banking (BDO and China Banking Corp.), property (SM Development Corp.) and tourism (SM Hotels and Conventions Corp.).

The group is also into gaming through Belle Corp. that is building the Belle Grande integrated gaming resort complex.

SMIC is also has a 28-percent stake in gold and copper miner Atlas Consolidated Mining and Development Corp. It entered Atlas by converting debts to equity.

Meanwhile, Phoenix shareholders also approved a plan to acquire Davao-based Chelsea Shipping Corp. for P1.42 billion to ensure efficient supply of oil for its gasoline distribution business.

The shipping firm has 10 vessels in its fleet, two of which serve the regional trade route of Taiwan to the Philippines.

From 120 stations in 2009, Phoenix Petroleum’s branch network increased to 161 and 220 stations in 2010 and 2011, respectively. It ended the first quarter with 240 retail stations.

Phoenix Petroleum is into the trading of refined petroleum products and lubricants, operation of oil depots and storage facilities, and allied services.