Petron offers to purchase nearly half of its $750M in subordinated securities

PETRON CORP. has offered to buy nearly half of its $750 million in undated subordinated debts as part of the company’s active management of its capital structure.

In a disclosure to the stock exchange on Monday, Petron said the executive committee of its board of directors authorized a tender offer to holders of its outstanding $750 million, 7.5% undated subordinated capital securities.

Subordinated capital securities rank below other debts in case of liquidation.

At the same time, Petron’s executive committee also gave the go-signal for the issuance of US-dollar denominated subordinated capital securities, which will fund the tender offer of up $350 million.

“The Tender Offer is being made in connection with a concurrent offering of senior perpetual capital securities,” said Petron, which refines crude oil and markets and distributes refined petroleum products in the Philippines and Malaysia.

The company said it might amend, extend, re- open, waive any condition or terminate the tender offer any time subject to the applicable law and provided in the offering’s memorandum.

At its sole discretion, Petron may also increase or reduce at its discretion the maximum amount it will accept.

Petron said if the aggregate amount of the securities validly tendered exceeds the final maximum acceptance amount, it would accept the debts on a pro rata basis such that the total principal amount does not exceed the maximum.

The payable price per $1,000 in principal amount of the securities will be $1,030, plus any accrued but unpaid distributions and any arrears of distributions.

When it considers the potential allocation of the new securities, Petron said it would look favorably on investors who are security-holders that have informed the company or the joint dealer managers that they have validly tendered, or expressed a firm intention to tender their securities.

But the company said it is not obligated to do so and may take into account “other relevant considerations” in the allocation of the new securities. Those interested in the tender offer have been given a deadline of Jan. 16, 2018.

The Hongkong and Shanghai Banking Corp. Ltd., Singapore Branch is the sole global coordinator for the tender offer and the joint dealer managers along with Australia and New Zealand Banking Group Ltd.; DBS Bank Ltd.; Deutsche Bank AG, Singapore branch; Standard Chartered Bank; and UBS AG, Singapore branch.

On Monday, shares in Petron rose 0.11% to P9.35 each. —