Petron refinancing $750-M securities

Oil giant Petron Corp. is seeking to refinance its $750-million securities listed on The Stock Exchange of Hong Kong Ltd.

In a disclosure to the Philippine Stock Exchange yesterday, Petron was cleared by its executive committee to seek permission from holders of the $750-million securities as it seeks to amend the trust deed dated Feb. 6, 2013 to issue new undated capital securities.

The company said it intends to issue new undated capital securities to repurchase, refinance and/or redeem the 2013 securities.

“The new securities are expected to be senior to the 2013 securities until such 2013 securities are repurchased, refinanced and/or redeemed,” it said.

In order to do that, Petron is seeking the proposed amendments by way of the consent solicitation to confirm its ability to issue the new securities.

In 2013, Petron raised $500 million and another another $250 million from the issuance of perpetual bonds which was used to finance its Refinery Master Plan 2 (RMP-2).

Aimed to make it at par with the most advanced refineries in the region, the RMP-2 allowed Petron to raise its production from 120,000 barrels per day to 180,000 barrels per day.

This also allowed the oil company to start local production of Euro-IV compliant fuel products, offering a full-range of premium fuels to the market compliant with global standards ahead of the government mandated deadline.

Euro IV-compliant fuels have a significantly lower sulfur content of 50 ppm (parts per million) compared to the current Philippine standard of 500 ppm.

To support its operations moving forward, Petron is eyeing to upgrade its existing refinery, expand its Malaysian refinery and put up a new refinery in the Philippines.

Petron president and CEO Ramon Ang said earlier upgrading its Bataan refinery would entail an investment of $500 million over the next two years.

The upgrade would start in the next few months and will take two years to complete, allowing the company to raise capacity from 180,000 barrels per day to 260,000 barrels per day.

In Malaysia, Petron is also eyeing to upgrade its refinery there to have a bigger contribution to its overall business. At present, Malaysia contributes 25 percent.