PetDag selling Philippine LPG stakes

Petronas unit disposing of its equity interests in two companies for RM532.5mil

PETALING JAYA: Petronas Dagangan Bhd (PetDag) will sell its 100% equity interest in Petronas Philippines Energy Inc (PEPI) and 40% equity interest in Duta Inc to Phoenix Petroleum Philippines Inc for US$124mil (RM532.5mil).

With this, the group will be exiting the liquefied petroleum gas (LPG) business in the Philippines.

The total cash consideration for the divestment of both companies are subject to a price adjustment mechanism at its completion, PetDag said in a filing with Bursa Malaysia.

Upon completion of the divestment, PEPI will cease to be an indi- rect wholly-owned subsidiary while Duta will not be an indirect associated company of PetDag.

Maybank Investment Bank is the financial adviser to the group for this divestment.

In an earlier statement, PetDag chairman Md Arif Mahmood said the exit from the LPG business in the Philippines was part of the company’s portfolio review exercise. He, however, did not elaborate further.

Duta leases properties to PEPI, which in turn distributes and markets LPG and other petroleum products.

PDB (Netherlands) BV, a unit of Petronas Dagangan, last month signed a memorandum of understanding (MoU) with Phoenix Petroleum. PDB (Netherlands) also represented local partners Alsons Consolidated Resources Inc and Masaligan Inc, the owners of the remaining interest in Duta that also seek to divest their stakes.

The divestment to the Philippines’ largest independent oil company is, however, subject to approval by the Philippine Competition Commission (PCC).

In the statement, PetDag said the PCC had informed the group that it would soon commence its Phase 1 review with the receipt of the PCC Notification Form.

“The form provides a framework for supplying to the PCC the information required under Section 17 of the Philippine Competition Act (PCA) and Rule 4 of the regulations,” it said.

Barring any unforeseen circumstances, the divestment is expected to be completed in the third quarter of 2017, upon fulfilment of all conditions precedent, it added.

PetDag, which holds the lion’s share of the cooking gas and industrial LPG market in Malaysia, operates three downstream companies overseas, the others being in Vietnam and Thailand.

The Petronas subsidiary had tried to sell its Vietnam businesses – Petronas (Vietnam) Co Ltd (PVL) and Thang Long LPG – to Totalgaz Vietnam Ltd.

While it managed to complete the sale of PVL, Totalgaz cancelled the other deal in January this year.

PEPI, which was set up in 1995, started commercial operations in mid-1997. It was originally under parent Petronas but not PetDag.

In 2012, PetDag took over Petronas’ downstream companies in the Philippines, Vietnam and Thailand for US$62mil cash.