Phoenix Petroleum upsizes corporate notes issue to P3 billion

MANILA, Philippines - Davao-based independent oil firm Phoenix Petroleum Philippines Inc. plans to raise the issue size of its five-year corporate notes to as much as P3 billion from the original P1 billion.

The upsized issue was assigned a rating of PRS Aa minus, which means that the issuer’s capacity to meet its financial commitment on the obligation is very strong.

“Obligations rated PRS Aa are of high quality and are subject to very low credit risk,” domestic credit rating agency PhilRatings said.

Early this year, PhilRatings assigned a PRS Aa rating to the company’s planned P1 billion notes issuance.

The new rating considered the increase in the size of the issuance, additional loan availments in 2012, as well as the challenge of consistently generating positive cash flows.

Phoenix claimed it accounted for 5.93 percent of the market last year, a sharp increase from its 3.2 percent market share in 2010, in terms of sales volume.

The company has steadily seen an increase in its retail network from only 161 outlets in 2010 to 220 last year and further to 255 as of end-June 2012.

Despite a growing network, Phoenix still has to contend with the Big Three- Petron, Shell and Chevron – in improving its market position as these oil players have well-established markets.

Phoenix reported a net income of P205.74 million in the first half this year, down 32.65 percent as higher expenses offset robust revenue growth. Sales revenues grew 21 percent to P16.9 billion, due to the higher sales volume resulting from the continued expansion of the company’s retail and commercial/ industrial clients.

PhilRatings noted that Phoenix’s use of leverage has likewise been increasing from 1.39x in 2010, debt to equity has moved up to 1.77x in 2011.

For this year, the company will partly refinance short-term debts with additional loans.

PhilRatings, however, said the company has built up receivable and inventory to service the requirements of its expanding retail and industrial clients.

Phoenix plans to double the number of its service stations to at least 500 in the next five years through a nationwide expansion program in a move aimed at maintaining its position as the top independent oil firm in the country.

Phoenix Petroleum is into the trading of refined petroleum products and lubricants, operation of oil depots and storage facilities, and allied services.