Phoenix Petroleum Philippines Inc. expects to raise over P9 billion from the proposed sale and lease back of its assets to BDO Unibank Inc., top executives said Thursday.
Phoenix disclosed the plan during the company’s annual stockholders meeting where the company said the planned sale and lease back is one of its steps to restructure its debts.
“One proposed step for the restructuring of its debt is to enter into a sale lease back agreement with BDO Unibank inc. involving some of the assets such as its terminals, depots and retail stations. The restructuring will allow the company to receive over P9 billion for the transfer of the assets which will be applied to its current obligations and reduce its debt,” Phoenix officer-in-charge chief finance officer Ignacia Braga said.
“BDO has at the same time agreed to lease back to the company the same set of assets in the process of ensuring the company is still able to use the terminals and the depots through a lease agreement,” she said.
Braga said Phoenix was in the process of streamlining its operations, restructuring its debts and identifying potential sources of liquidity to generate cash flow to settle its obligations or generate some liquidity for working capital.
“The key objective is to bring back the company to a healthy financial position and regain its stronger market position that it enjoyed pre-pandemic,” she said.
“In this regard, a major focus on its liability management exercise which involves negotiations with its creditor banks and suppliers for mutually acceptable debt servicing agreements and on a case a case basis divesting certain assets which has the effect of either raising capital for operations or reducing debt,” Braga said.
She said the proposed sale and lease back with BDO would also grant the company the exclusive right to repurchase the asset within three to five years from the time of sale when the company is in a better position to purchase the said assets either fully or partially at the company’s discretion.
“The company is looking to utilize certain core and non-core assets such as real estate, terminals, depots, in order to settle its obligations via sale and leaseback agreement,” Phoenix president Henry Albert Faudullon said.
He said the repurchase agreement within three to five years from the time of the sale “ensures that there will be no effect on the company’s operations and its ability to capture value from its business.”
Phoenix announced this week it was divesting its investments in PNX Petroleum Singapore Pte. Ltd (PNX SG) and planned to use the over P1-billion ($19.2 million) proceeds for working capital.