PETRON'S CORPORATE NOTES ISSUE HEAVILY OVERSUBSCRIBED

Tuesday, July 25, 2006

The country’s leading oil refining and marketing company Petron Corporation successfully auctioned a five-year P5.5 B Fixed Rate Corporate Notes Issuance (FXCN) recently. The issue was upsized from an original amount of P3.0 B after receiving bids amounting to P11.2 B, close to 4X oversubscription. 

The facility was priced at 8.875% for a five year tenor, 53 basis points lower than the July 21 5-year MART1 rate of 9.405%. This issue has achieved the distinction of being the largest peso private placement and the lowest-priced corporate issue of its kind.

Last February, Petron’s overall credit worthiness was given a PRS Aaa rating by Philratings Corporation. A rating of PRS Aaa is given to corporations ‘with a VERY STRONG capacity to meet its financial requirements relative to that of other Philippine corporates.’

From Petron’s Chairman, Nicasio I. Alcantara, “We are extremely happy with our Arrangers, BPI Capital Corporation and ING Bank N.V., Manila Branch, who demonstrated deal savvy and a deep appreciation of the market by structuring and pricing this landmark transaction in a volatile market.” 

He further adds, “The strong response to our notes issue reflects the trust and confidence of the investment community in the viability and profitability of Petron over the long-term. We define our leadership not only in terms of market share or revenue but also in the areas of governance and transparency.”

The company was again named as one of the Best Governed Listed Companies in the Philippines by the Institute of Corporate Directors (ICD) in 2005. Petron was recognized based on the following criteria: rights and equity of shareholders, role of stakeholders, disclosure and transparency and board responsibility.

Funds raised from the issuance will be used to finance the company’s Petro Fluidized Catalytic Cracker (PetroFCC) which is already being constructed at its Bataan refinery. The PetroFCC will enable Petron to produce more high-value white products (Diesel, gasoline and LPG) and extract the petrochemical propylene.

Petron will also construct an additional refinery unit for the extraction of other petrochemicals namely benzene and toluene, and expansion of its mixed xylene production capacity. The units, which are expected to significantly contribute to the company’s bottom line, will be commissioned in February 2008.

“Given the demand and supply imbalance for petrochemicals, we are very optimistic that these projects will sustain our growth momentum for years to come,” President and CEO Khalid D. Al-Faddagh added.