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Business

Phoenix Petroleum exits shipping, industrial parks

Danessa Rivera - The Philippine Star

MANILA, Philippines - Phoenix Petroleum Philippines Inc. is divesting from its shipping and industrial park businesses as it decided to focus on its core business of petroleum distribution.

In a disclosure to the Philippine Stock Exchange, Phoenix Petroleum said its board approved the sale of wholly-owned subsidiaries Chelsea Shipping Corp. (CSC) and Phoenix Petroterminals and Industrial Park, Corp. (PPIPC) to the Udenna Group, the effective parent and majority stockholder of the company.

The sale, estimated to cost P3-3.5 billion, is still subject to third-party valuation and fairness opinion.

The company said the sale will significantly allow it to allocate all of its resources to fuel its aggressive growth in its core business and the distribution of petroleum products nationwide.

Proceeds will allow Phoenix Petroleum to pay off existing debts to bring down interest-bearing debt-to-equity ratio from 1.69:1 at end- 2015 to 0.92:1 by end-2016, save P150-160 million a year in interest expense starting 2017 after reduction in interest bearing debt, and generate P500-700 million in non-recurring gain this year, Phoenix Petroleum vice president for external affairs Raymond Zorilla said in a text message.

Zorilla said CSC and PPIPC are not part of the company’s core competencies and are not related to its main business, which is the marketing and sale of petroleum products.

 “CSC and PPIPC are backward integrated businesses at best. As such, they have divergent risks, potentials and capital expenditure requirements from that of Phoenix,” he said.

CSC and PPIPC represent about eight percent of the company’s consolidated assets as of end-2015, with an estimated market value of about P7 billion.

In the same disclosure, Phoenix Petroleum said it also got board approval to increase the maximum amount for the share buyback program currently being implemented from P250 million to P450 million.

 

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