Basic Energy hikes follow-on offer to P2B

Basic Energy Corp., formerly Basic Petroleum Corp., has raised the size of its planned follow-on offering this month to P2 billion.

In a disclosure to the Philippine Stock Exchange, Basic Energy said it increased the number of shares to be offered to the public to 5.5 billion without an over allotment option.

BDO Capital & Investment Corp. has been tapped as lead underwriter for the issue.

Proceeds from the offering will be used to fund the company’s expansion into biofuels and other alternative and renewable energies and mineral resources industries.

The company’s decision to go into bioethanol is in line with the Biofuels Act of 2007, which mandates a five percent bioethanol blend in gasoline.

Basic Energy acquired Zambo Norte BioEnergy Corp., whose greenfield project is expected to yield 200,000 liters of ethanol upon full operations in 2009.

Demand for bioethanol is expected to increase to over 500 million liters per day by 2011 with a mandated 10-percent blend.

Basic Energy was transformed into a holding company with bioethanol producer Zambo Norte as one of its subsidiaries.

Basic Energy earlier signed an agreement with Pilipinas Shell Petroleum Corp. to possibly supply up to 50 milion liters of bioethanol a year to the oil refiner.

Under the agreement, both Basic and Shell agreed to “undertake a joint study to determine the feasibility of entering into an off-take agreement for the supply of bioethanol.”