Petron prepares capital securities worth $500m

Petron Corp. will issue $500 million in senior perpetual capital securities on January 19 to refinance a previous $750-million, 7.5 percent undated subordinated capital securities.

The new offering carries a 4.6 percent rate a year, Petron said in a disclosure over the weekend

“Further to our disclosure dated January 8, 2018 relating to the proposed offering by the company of US dollar-denominated undated unsubordinated capital securities, this is to advise the company has priced the offering today, with an issue size of US$500 million and expected issue date of January 19, 2018,” Petron said.

Early this week, the board of Petron authorized the company to issue US dollar denominated unsubordinated capital securities to refinance $750 million in outstanding undated subordinated securities.

Petron said it was embarking on a tender offer to holders of its $750 million, 7.5 percent undated subordinated capital securities.

“The tender offer is being made in connection with a concurrent offering of senior perpetual capital securities (the new securities) by the company,” the oil refiner said. 

Petron used the previous debt of $750 million to partly finance the $2-billion upgrade of the Bataan refinery to make it at par with other facilities in Asia

The company has completed its $2-billion Refinery Master Plan-2 (RMP-2), which allowed Petron to produce more higher-value products such as gasoline and petrochemicals, while eliminating the negative margin fuel oil.

Petron said the company would accept up to $350 million under the tender offer.

“The tender offer is part of the company’s active management of its capital structure and is intended to be funded by the issuance of the new securities,” Petron said.

Petron set the tender offer deadline on January 16.

The company retained The HongKong and Shanghai Banking Corp. Ltd., Singapore Branch as the sole global coordinator, 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 as joint dealer managers for the tender offer.

Topics: Petron , capital securities
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