Phoenix Petroleum eyes debt writeoff

MANILA, Philippines - Publicly-listed oil firm Phoenix Petroleum Philippines Inc. is looking to lower its debt expenses after selling its stake in its shipping and industrial park businesses for P3 billion.

In a disclosure to the Philippine Stock Exchange, Phoenix said it sold its entire stake in Chelsea Shipping Corp. to affiliate Chelsea Shipping Group Corp. for P2 billion as well as its full interest in Phoenix Petroterminals & Industrial Park Corp. to Udenna Development Corp. for P1 billion.

The sales will allow the company to allocate its resources to fuel and drive the expansion of its core business and distribution of petroleum products nationwide, the firm said.

The proceeds of the sale will be used to pay off existing debts, Phoenix Petroleum said.

In particular, the sale of Chelsea Shipping will save the company between P150 million to P160 million a year in interest expense, it said.

Chelsea Shipping is a company principally engaged in the maritime transportation of petroleum and other petroleum-based products/fuels for industrial, marine, aviation and automotive use, whether wholesale or retail.

On the other hand, Phoenix Petroterminals & Industrial Park Corp. is the developer and manager of the Phoenix Petroterminals & Industrial Park which is in the business of acquiring and selling lands, buildings and improvements.

The industrial park consists of about 94 hectares of land spanning three barangays, namely Salong, Puting Bato West and Lumbang Calzada in Calaca, Batangas.

Phoenix Petroleum said the shipping and industrial park ventures are different and independent from its core business of marketing and sale of petroleum products.

It said there is no material effect in terms of business and operation of Phoenix.

“On the matter of the financial condition of Phoenix, the disposition will relieve as it will free up the consolidated debt-to-equity ratio of the company. Moreover, the proceeds will enable the company-to-pay off its existing interest-bearing debts and thus improve its financial statements,” the firm said.