INDEPENDENT oil company Phoenix Petroleum Philippines, Inc. is granting preferential rights to PXP Energy Corp. to participate and acquire up to a 49% stake in the former’s project to build a liquefied natural gas (LNG) terminal and a gas-fired power plant with a Chinese partner, the oil and gas exploration company told the stock exchange on Friday.
The disclosure follows PXP Energy’s announcement on Thursday that Dennison Holdings Corp. is set to subscribe for 340 million shares in the listed company at a discounted price of P11.85 per share for a total P4.03 billion.
Dennison and Phoenix Petroleum are led by Dennis A. Uy, a businessman who traces his roots to Davao City who achieved national prominence through a series of acquisitions, including a liquefied petroleum gas retailer, a convenience store, and a pastry shop — all in the past two years.
PXP Energy said its board of directors signed the subscription agreement with Dennison on Oct. 26, 2018.
It said a “substantial consideration” for the company agreeing to the subscription is Dennison causing its affiliate or related party Phoenix Petroleum to grant “certain preferential rights” to PXP Energy or to any of its affiliates to acquire the stake in the LNG project.
The preferential rights, which is subject to its board approval and consent of Phoenix Petroleum’s partner China National Offshore Oil Corp. (CNOOC), grants PXP Energy equity, interest or participation in the contemplated joint venture or related agreement for the construction, development, and operation of an LNG terminal and gas-fired power plant in the Philippines.
PXP Energy said after the subscription to the shares, Dennison will be entitled to at least one seat in its board and to nominate the vice-chairman. The subscription price represents a discount of 20% to the 90-day volume weighted average price of its shares. It is payable in two tranches.
PXP Energy also said its affiliate Philex Mining Corp. also signed the subscription agreement for 260 million common shares of the exploration company at P11.85 per share or total amount of P3.081 billion payable in two tranches.
The total subscription of 600 million via private placement will be issued out of PXP Energy’s unissued capital stock of 5.1 billion.
“PXP intends to use the proceeds from the private placement shares to fund its exploration activities and other oil assets within the Philippines and in Peru, and to repay advances from Philex,” the company said.
After the subscription, Dennison will have a total ownership interest in PXP Energy of 14.78%, while Philex Mining will increase its shareholding to 25.91% from 19.76%.
On Friday, shares in PXP Energy rose 2.84% to close at P18.10 each. Those of Phoenix Petroleum slipped 0.19% to P10.70 apiece. Philex Mining gained 0.86% to close at P3.53 per share.
PXP Energy directly and indirectly owns 77.5% of Forum Energy Ltd., a London-listed company whose main asset is a controlling interest in offshore exploration Service Contract (SC) 72 west of Palawan island in the disputed West Philippine Sea. It had held talks with CNOOC to jointly explore the area. — Victor V. Saulon
