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JG
SUMMIT Holdings Inc. (JGSH), the listed conglomerate of
the Gokongwei Group, has offered to buy for P24.5
billion the 40-percent stake held by state-owned
Philippine National Oil Co. (PNOC) in the country’s
largest oil refiner Petron Corp.
If the
3.75 billion shares owned by PNOC were to be sold today,
the state-owned firm will get a premium of 95 centavos
per share, as Petron stocks were only valued at P5.60
each at the end of trading Wednesday.
“We are
interested in making an offer to purchase the shares at
P6.55 each,” said Lance Gokongwei, president and chief
operating officer of JG Summit, in a one-page letter
sent to Energy Secretary and PNOC ex-officio chairman
Angelo Reyes. “We are prepared to discuss this offer
with you, as well as the other terms and conditions to
be agreed upon for the said purchase.”
In a
separate phone interview, JG Summit senior vice
president for corporate planning Bach Johann Sebastian
told the BusinessMirror Petron would be a worthy
investment because it is a downstream integration to
their petrochemical business. That business is carried
out by wholly owned unit JG Summit Petrochemical Corp.,
which manufactures polyethylene and polypropylene
products. Market analysts described the Gokongwei
group’s decision to make a bid for Petron as a “good
move.”
Energy
Secretary Reyes said Wednesday that another group
besides JG Summit also expressed interest in the shares
of Petron.
“The
Gokongwei Group and Morgan Stanley have expressed
interest over the transaction,” said the energy chief in
a press conference.
Reyes
said PNOC has until May 12 to decide what to do. PNOC
has an option to exercise its right for first refusal or
to identify an eligible third party to exercise that
right.
In the
share-purchase agreement between the Philippine
government and the Saudi Arabian oil company when the
latter bought the 40-percent stake in Petron during the
Ramos administration, Reyes said it was stated that
should government or Aramco Overseas Co. wish to sell to
the public, it must first offer to the other party the
right of first refusal and must sell only to an eligible
third party.
Reyes
said the energy department also tapped the services of
the Development Bank of the Philippines as financial
adviser. The government earlier said that the PNOC would
still have to look into the offer.
The PNOC
has been given 60 days from March 13 within which to
make a determination of whether it wants to exercise
preemptive rights or exercise its option to match the
offer, or to assign to another buyer.
Ashmore,
which is a global asset-management company listed in the
London Stock Exchange, has assets under management
amounting to $36.5 billion and has a strong track record
of constructive partnerships worldwide, including
significant Philippines-related investments over a
period of many years. However, senators critical of
Aramco’s decision to sell its stake to Ashmore worry
that precisely because of this track record, it would
tend to treat Petron as nothing more than a vehicle to
make money—thus, to be dispensed off at the first
opportunity.
Aramco
had earlier expressed interest to sell its 40-percent
stake in Petron at $550 million to its prospective
buyer, Ashmore Group’s SEA Refinery Holdings.
Reyes
said before the Lenten break that the PNOC board would
discuss the sale of Aramco shares in Petron,
particularly on whether to exercise its right to have
first crack at it or to assign it to another party or
third party.
Reyes
said the study that would be undertaken will essentially
look into the valuation of shares, especially the price
the government will have to accept.
Reyes
said an investment decision has to be made first
followed by a financial decision. “And do we have the
money?” he asked. “And we would first need to look at
the cash flow from the proceeds of Malampaya as sources
for funding for this—if we decide to exercise that
option,” said Reyes.
PNOC is
set to meet Thursday with financial advisers to discuss
plans for Petron and whether or not it will waive its
right on the 40 percent owned by Saudi Aramco.
Some
market pundits, meanwhile, said JG Summit made a “good”
move in offering to buy in Petron.
“It has
a track record of spotting a good investment. I think JG
Summit is a smart investor,” said Conrado Bate,
president of CitisecOnline.com, adding that raising
money would not be a problem for the Gokongwei group.
In 2000,
JG Summit offered to buy into telecom giant Philippine
Long Distance Telephone Co., but the plan did not
materialize.
JG
Summit ended 2007 with a net income of P8.6 billion from
P6.5 billion a year ago as its food and airline
businesses delivered strong results. Revenues also went
up to P92.5 billion, up 7.4 percent from the previous
year’s P86.1 billion.
The
company, whose shares are traded at the Philippine Stock
Exchange, said its food unit Universal Robina Corp. (URC)
posted a 7.2-percent improvement in revenues to P37.7
billion, mainly because of the impressive growth in
sales of its beverage, snack foods and animal feeds
businesses. URC continues to be the biggest contributor
to the group’s revenues, accounting for 40.8 percent of
the total.
Among
all its units, Cebu Pacific recorded the most
significant rise in earnings from P196.79 million in
2006 to P3.61 billion in 2007. This was brought about by
a substantial increase in passenger load due to
expansion in both domestic and international routes. |
