Listed fuel retailer Phoenix Petroleum Philippines, Inc. has moved to acquire a shipping firm for some P1.5 billion, which will help it eliminate potential supply disruptions, Business World reports.
The company will acquire 100% of Chelsea Shipping Corp. via a share swap agreement, Phoenix Petroleum said in a disclosure yesterday.
Phoenix Petroleum will purchase the firm through a 90% share swap and 10% cash agreement.
To cover the share swap provision, Phoenix will be issuing 171,250,799 authorized common shares with a value of around P1.42 billion.
“The strategic acquisition of Chelsea Shipping is consistent with our goals of sustaining our competitiveness in the industry and fostering the long term success of our company,” said Phoenix Petroleum President and Chief Executive Dennis A. Uy in the disclosure.
Chelsea Shipping is 100% owned by Udenna Management & Resources Corp. which is already a stockholder of Phoenix Petroleum.
It was incorporated in 2006 and has 10 vessels in its fleet. It owns the largest Philippine-registered oil tanker.
It services Phoenix Petroleum, Cebu Air, Inc., PTT Philippines Corp., National Power Corp., Total Bulk Corp., Batangas Bay Carriers, Inc. and Marine Fuels Philippines, Inc.
It also provides bunkering services to the United States Navy in Subic Bay.
“About 90% of Chelsea Shipping’s revenues actually come from Phoenix Petroleum so right now there are no plans to grow the business further. We just need to wait for the approval of the stockholders for the acquisition,” said Phoenix Petroleum Chief Finance Officer Joseph John L. Ong in a separate telephone interview with BusinessWorld.
The firm said it will be issuing P500 million worth of convertible corporate notes to raise funds.
“The issuance is part of our plan to raise long-term capital to refinance short term debt and finance capital expenditures for 2012,” said Mr. Uy.
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