Pilipinas Shell mulls IPO by 1st qtr of 2003

Faced with possible sanctions from the Department of Energy (DOE), Pilipinas Shell Petroleum Corp. is likely to undertake an initial public offering and list its shares in the Philippine Stock Exchange (PSE) within the first three months of 2003.

Shell country chairman Eliseo Santiago said the company’s board is set to discuss the planned IPO next month.

"We have finished assessing the valuation of the shares but I can’t say anything until we get an approval from the board," Santiago said.

According to Santiago, Shell’s financial adviser Salomon Smith Barney has completed its valuation process and has advised Shell to defer its IPO for next year as the market is still not conducive to public listing.

"It will only move funds from existing players in the stock exchange to Shell. So, it will not generate new investments. That’s the current assessment of our advisor," he said.

Santiago said once they secure approval from the board by November, they will subsequently submit appropriate applications with the Securities and Exchange Commission (SEC) and the PSE.

"From the board approval, maybe another three months. So, we are really looking at next year, within the first quarter, at the earliest depending in the market condition at the point in time," he said.

He said they have been communicating with the authorities, particularly with the DOE, on how they intend to go about their IPO plans.

DOE is set to issue a circular setting penalties for oil firms which will not undertake their respective IPOs within a prescribed period. Under the circular, the DOE secretary will be given ample power to impose a deadline on oil firms to undertake their public offering.

Oil refineries, like Shell and Caltex Philippines, Inc., are required under the Oil Deregulation Law of 1998 to issue at least 10 percent of their shares to the public.

So far, only Petron Corp. is listed at the PSE when it offered 10 percent of its shares in the stock market in 1994.

Perez believes Shell and Caltex should be pushing for their IPO as they have already posted good earnings in 2001. As of end-December 2001, Shell registered a net income of P2.7 billion as against P1.1 billion net loss in 2000.

Santiago said the two companies have been updating DOE on the progress of their IPO plans. "We have been discussing with the DOE and we all agree that we should only go into the market if the situation is such that it will benefit all. Otherwise, it doesn’t serve the purpose. So, we will be prepared to go as soon as the market is ready to go," he said.