Shell, Caltex likely to postpone IPOs

The initial public offering (IPO) of Pilipinas Shell Petroleum Corp. and Caltex (Philippines) Inc. may be postponed to the first quarter of 2002, Energy Secretary Vincent S. Perez said.

"I think, we are going to revisit the plan in the first quarter of 2002. Bad market conditions are prevailing right now. How can we attract investors if we are in this situation," Perez told reporters in an interview.

Perez said there are a number of more important issues to be focused on by the oil firms aside from the IPO.

"I believe we should be focusing more on the oil depot," he said, noting that the oil firms need to concentrate on issues such as the transfer of their oil terminal outside Manila.

Under the Oil Deregulation Law of 1998, local oil refiners are mandated to list at least 10 percent of their shares at the Philippine Stock Exchange within three years following the passage of the law.

The IPO of Shell and Caltex should have been done last February but the two oil firms asked for an indefinite extension.

Based on an opinion of the Department of Justice (DOJ), the two oil refiners could list their shares at the local stock market when conditions are right.

The DOE has ordered the two oil majors to submit a quarterly report on the status of their planned IPO to determine if the time is right for them to offer their shares at the local bourse.

The regular submission of report is part of the implementing rules and regulations (IRRs) of the Oil Deregulation Law.

Both oil firms have expressed full cooperation with the government after being made aware that their respective public offerings might boost the country’s capital market.

"But I don’t think the conditions are good right now. I can’t predict the future. It could be hard to see if things are going to improve that much in the future," Caltex country chairman Nicholas Florio said.

Florio said Caltex will continue to study the conditions of the market to determine the proper timing for implementing the IPO.

To show the government that they are willing to list their stocks in the stock exchange, Caltex has commissioned JP Morgan-Chase Manhattan as its financial advisor for the planned offering.

Pilipinas Shell, on the other hand, said the benefits of the IPO would not be achieved under the present conditions.

Among the three oil majors, only Petron Corp. is listed at the local stock exchange. It listed 20 percent of its shares in 1994 after the government decided to divest 40 percent of its shareholdings to Saudi Arabia Oil Co. at present, the government, through the Philippine National Oil Co., owns 40 percent of Petron.