Philratings closely monitoring Petron
The Philippine Rating Services Corporation (PhilRatings), the pioneer domestic credit rating agency has announced that it is closely monitoring developments at Petron Corporation (Petron), taking into account Aramco Overseas Corporation’s (Aramco) sale of its 40% equity in the company for US$550 million.
In a notice sent to Philippine National Oil Co. (PNOC), Aramco has indicated its intent to sell its shares in Petron to SEA Refinery Holdings (SEA Refinery), a company owned by the Ashmore Group funds. As stipulated in the shareholders’ agreement between PNOC and Aramco, however, PNOC has sixty days, starting March 13, to match the offer of SEA Refinery. PNOC currently owns 40% of Petron, while the remaining 20% is held by the public, according to its published reports.
The Ashmore Group is a company listed in the London Stock Exchange and is a leading emerging market fund manager with US$36.5 billion in assets under management as at end-2007. It has a wide client base, primarily composed of institutional investors, including central banks and pension funds. PNOC is a state-owned corporation mandated to develop the Philippine energy sector and allied businesses.
The Ashmore Group’s entry into Petron as a significant stockholder or the possible buy-back by PNOC of Aramco’s 40% share will be evaluated closely by PhilRatings in terms of its impact on Petron’s credit profile. PhilRatings’ review will focus on the credit strengths and weaknesses which may arise from these developments taking into account factors such as the effect on efficiencies and synergies as a result of the change in ownership, possible management changes and implications in terms of shareholder support with regard to finances and operations, among others.
Petron currently has a rating of PRS Aaa, both as an issuer and for its P6.3 billion fixed rate corporate notes (FXCN) that will mature in August 2011. A PRS Aaa rating is the highest rating on PhilRatings’ credit rating scale. Petron posted a net income of P6.4 billion in 2007 from the previous year’s P6.02 billion, or a 6.3% increase. Sales revenues amounted to P210.52 billion last year, from P211.73 billion in 2006.
Petron saw its domestic sales volumes in 2007 increase by 2% to 41.81 million barrels, from 41.06 million barrels. Overall, total sales volumes increased to 52.23 million barrels last year from 51.97 million the previous year. Petron continued to sustain its market leadership with 38.9% of the total market. Aside from the additions in its fuel product line, the company’s market share was also boosted by its acquisition of Chevron’s retail LPG business. This significantly increased LGP sales by nearly 25%.
The year 2007 also saw the mechanical completion of the company’s PetroFCC unit at its 180,000 barrel-per-day refinery in
(Mr. Ed F. Limtingco can be reached at 0917-7220521 or at [email protected])
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