Parent PNOC puts on hold subsidiary's secondary offering

Parent Philippine National Oil Co. (PNOC) has put on hold the plan of subsidiary PNOC Exploration Corp. for a secondary offering in the stock market until a stability returns to global markets. PNOC Exploration is the upstream oil, gas and coal subsidiary of state-own PNOC which owns 99.79 percent in the petroleum services and trading company. Its shares are listed on the Philippine Stock Exchange, of which 0.21 percent is held by public shareholders. The board of directors are primarily concerned with share valuation in light of “all the instability in the global markets," Energy Secretary Jose Rene Almendras told reporters over the weekend. "It’s on hold. The board wants to study it. “It’s about the timing to do a secondary offering with all the instability in the global markets, because we expect a lot of foreign companies to be interested in that," the Energy chief said. He made it clear that the secondary offering is more of toeing the regulation line than privatization, and that it is definitely about raising new capital from the stock market. "First, we’re not doing it to raise funds, just to comply. It’s not as if we have to do it otherwise we can’t do the projects. No, we don’t need the money," he said. Listing rules on public ownership The PSE listing rules requires a 10-percent minimum public ownership of publicly listed companies. A company whose shares are already listed on the stock exchange pursues a secondary offering by issuing new shares of stock, usually to refinance or raise capital for growth. "So, the option is do you comply, and continue to be listed or do you delist?" Almendras asked. “If I’m going to sell my shares at a price which I think is less than what I actually think it is, why would I sell it?" he added. PNOC Exploration A shares for Filipino investors posted no transaction the PSE last Friday. Its B shares, for foreign investors closed at P27 apiece. "Why sell at that price?" Almendras asked. “If according to my calculations, we just declared a P3-billion dividend. We are accountable to the shareholders and in this case the shareholder is the Republic of the Philippines. It will be unfair if we sell the shares at a price lower than our valuations simply because that’s the ongoing market price," he said. Parent PNOC is not against continuing the listing of the shares or complying with the regulatory requirements, according to the Energy secretary, saying the board of directors is hesitant to issue new shares for sales because of the timing and the valuation. “We're asking for reconsideration, to give us time to let the markets stabilize. Kasi (Because) you go in the market in such a situation now, you won’t be able to get the right valuation for your [shares]," Almendras added. — VS, GMA News