The board of Petron Corp. has authorized the company to issue US dollar denominated unsubordinated capital securities to refinance $750 million in outstanding undated subordinated securities.
Petron said in a disclosure Monday 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 negative margin fuel oil.
Petron said the company will accept up to $350 million under its 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, 2018.
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.
Petron also plans a $5-billion refinery expansion that will bring the existing capacity of its Bataan refinery to 360,00 barrels per day in three years from the current 180,000 barrels.
Petron president Ramon Ang said the expansion of the Bataan facility would be done in phases at 90,000 barrels per day for each phase. The first phase is expected to be completed in 2019 and the next phase in 2020.
“We can start (the first phase) in 2018, to be completed in 2019. We forecast an increase in income,” he said.
Ang said the first phase of the expansion would cost $1.5 billion while the second phase is estimated at $3.5 billion.
He said the expansion would help produce more petrochemical products.