Phoenix Petroleum Philippines Inc. said Monday its board approved the sale of wholly-owned subsidiaries Chelsea Shipping Corp. and Phoenix Petroterminals and Industrial Park Corp. to Udenna Group, the oil firm’s parent and majority stockholder.
Both companies represented about 8 percent of the consolidated assets of Phoenix as of end-2015 and had an estimated market value of about P7 billion.
Phoenix said in a disclosure to the stock exchange Monday the sale of Chelsea and Phoenix Petroterminals, which would be subject to a third-party valuation and fairness opinion, would have an estimated selling price of P3 billion to P3.5 billion (net of debt). The sale was expected to generate between P500 million and P700 million in non-recurring gain for the company.
The company is selling the assets because they are not core-competencies of Phoenix, an official said.
“CSC and PPIC are not core competencies of not directly related to PNX, which is the marketing and sale of petroleum products. CSC and PPIC are backward integrated businesses at best. As such they have divergent risks, potentials and requirements from that of PNX,” Raymond Zorilla, Phoenix assistant vice president said.
Phoenix said it would use the proceeds of the sale to pay off existing debts “which is expected to reduce interest-bearing-debt-to- equity ratio from 1.69:1 at the end of 2015 to 0.92:1 by the end of 2016.”
It said the reduction in interest bearing debt would save Phoenix P150 million to P160 million annually in interest expenses starting 2017.
“The sale will significantly allow PNX to allocate all of its resources to fuel its aggressive growth in its core business and the distribution of petroleum products nationwide,” Phoenix said.
Phoenix acquired Chelsea Shipping via a share swap agreement in 2012 from Udenna. The oil firm invested P242 million for the acquisition and operation of a brand new tanker vessel to support and serve the company’s oil importation logistics requirement.
Phoenix acquired the Petroterminals and Industrial Park from Phinma Energy Corp. formerly Trans-Asia Oil and Energy Development Corp. in 2010 for P334 million.