Shell, Caltex excused from IPO deadline

The Department of Energy (DOE) has allowed Pilipinas Shell Petroleum Corp. and Caltex Philippines Inc. to conduct an initial public offering (IPO) even after the three-year period under the Oil Industry Deregulation Law (RA 8479) lapses this month.

This comes in the wake of a Department of Justice (DOJ), opinion dated Feb. 12, 2001 which states that "it is not mandatory but rather directory in nature."

The DOJ said the prohibition in the law on the acquisition of shares in another oil company applies only to stockholders who own a "substantial" interest in an oil company.

Caltex and Shell have been requesting the DOE for the deferment of the IPO in view of the prevailing economic situation.

The DOJ said that the opinion resolves the issues of whether or not the period is mandatory and, therefore, oil companies existing on the date of effectivity of the law and whether or not the prohibition of shares should be restrictively construed so as to inhibit any shareholder of an existing oil company from acquiring shares in another oil company.

It said the necessary implementing rules and regulations (IRR) must be in place before any such IPO is undertaken. The IRR should provide for the mechanism of effecting the IPO requirement to ensure that the purpose and policy of RA 8479 is achieved.

The DOJ noted that based on prevailing economic conditions, it is expected that an IPO at this time may well fall short of the norms of a successful offering both in terms of pricing and distribution if undertaken within the period. – Donnabelle Gatdula