Basic Energy signs docs to acquire 60% interest in Filoil for P3 B, stock suspended
The purchase of up to 60% of Filoil was approved by Basic Energy's [BSC 0.67 susp] board back in October, but the final documents for the P3 billion acquisition were signed on December 7th, and disclosed on December 13th.
The PSE suspended BSC under the Substantial Acquisitions Rule, which will require that BSC remain suspended until the company can provide comprehensive disclosure on the transaction and how it will impact the company going forward.
The BSC board, controlled by Rafael Villavicencio after the MAP 2000 Development Corp (M2DC) backdoor play, noted that its purchase of Filoil (also controlled by Mr. Villavicencio) will give BSC a “stable” source of “passive (dividend) income derived from the downstream oil industry business and fuel logistics services of [Filoil]”.
The BSC board also said that the acquisition is in line with its goal to become a “total energy company”.
MB BOTTOM-LINE
BSC gets to incorporate Filoil into its financial statements as a subsidiary since it’s acquiring a majority stake.
This makes BSC the latest entrant into the retail gas subsector of the energy sector, joining Petron [PCOR 3.17 0.63%], owned by San Miguel [SMC 113.00 0.44%], and Phoenix Petroleum [PNX 10.88 ?0.55%], owned by Dennis Uy.
The interesting link here is that Rafael Villavicencio is the son of Ramon F. Villavicencio, who is a director of PCOR’s parent, SMC. That said, PCOR has had a terrible time trying to leverage its position of dominance, which is kind of tragically hilarious considering the explosion of car ownership and road-based travel in the Philippines (COVID-times excluded, of course).
Still, it’s nice to give investors another option in the subsector. Perhaps BSC and Filoil will bring a new angle to the retail gas game that will improve profitability, reach, or service, and push the two incumbents in a better direction.
Or, perhaps Filoil will simply take its place among the many firms trying to build out the road travel infrastructure needed to support the growth of car ownership throughout the country. Either way, these are interesting times for BSC shareholders!
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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