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Philippines to sell 40% stake in Petron


October 7, 2008

Philippines to sell 40% stake in Petron
The Philippines wants to sell its 40 percent stake in oil refiner Petron Corp for 6.85 pesos a share to raise around 25.7 billion pesos ($542 million) to boost state coffers, Reuters quoted Petron as saying Monday.

The indicative price, equivalent to an 18 percent premium over Petron's closing price of 5.80 pesos a share on Monday, was conveyed to UK investment manager Ashmore Group, which has the right of first refusal over the shares.

Ashmore, which holds just over 50 percent of Petron, has 60 days to exercise its right to buy the government's stake.

"Ashmore will have to take the time to evaluate its position on the price," Eric Recto, one of two Ashmore nominees to the Petron board, told Reuters. "It's too early to make a statement."

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Ashmore unit SEA Refinery Holdings BV bought its initial 40 percent stake in Petron from Saudi Aramco for $550 million, or 6.531 pesos per share, below the government's indicative price.

The group bought an additional 10.57 percent in Petron at a tender in June at the same price. The government declined to sell its stake to Ashmore then, hoping to get a better price.

But the global financial crisis has since clobbered share markets. Petron closed 1.69 percent lower on Monday, while the main index .PSI dropped 2.6 percent.

The government is selling its entire 3.75 billion shares in Petron to support aggressive spending on the southeast Asian nation's creaking infrastructure.

The Philippines also wants to sell some of its stake in oil and gas explorer PNOC-Exploration Corp before the year end to raise 16 to 18 billion pesos and help keep the budget deficit this year at 75 billion pesos or lower, compared with a 12.4 billion peso shortfall in 2007.

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