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Petron’s Perpetual Preferred Shares (Series of 2014)




Petron Corp. (PCOR) plans to raise as much as P10 billion by issuing to the public a new set of perpetual Preferred Shares this October 2014.

The initial offer size is P7 billion, with an over-subscription option of P3 billion should there be extra demand.

In 2010, the oil refiner issued preferred shares paying 9.5281% dividend per year. The shares are currently traded in the PSE using the stock code PPREF. (See List of Preferred Shares Traded in the PSE)

According to the company, proceeds of the new Preferred Shares issuance will be used to redeem the P10 billion outstanding PPREF shares “which are callable starting on March 5, 2015 or on any Dividend Payment Date thereafter.”

The Preferred Shares shall be offered at a price of P1,000.00 per share.

Dividend Rates

The final dividend rate for Petron’s new Preferred Shares will be determined through an institutional bookbuilding process and will be determined and announced on October 17.

For now, the indicative interest rates of the shares are as follows:

  • Series 2A: 7-year PDST-R2 rate + 250 – 300 bps
  • Series 2B: 10-year PDST-R2 rate + 300 – 350 bps

Features of the Preferred Shares

Petron’s Perpetual Preferred Shares shares are cumulative, non-voting, non-participating, non-convertible peso-denominated shares. This means:

Cumulative – The annual dividends accumulate, meaning, if Petron will not issue dividends for the year, dividends will accrue and will have to be paid in succeeding years.

Non-voting – Preferred shareholders will not have the right to vote, unlike Petron Corp.’s common stockholders.

Non-participating – dividends are fixed and investors will not anymore participate in other incomes, such as additional profit distribution if profits are high or surpluses in case of dissolution.

Non-convertible – Petron’s perpetual Preferred Shares cannot be converted to common stocks.

Important Dates

Those interested to invest in this instrument should take note of the following dates.

  • Start of Institutional Bookbuilding: September 16
  • Dividend Rate Setting Date : October 17, 2014
  • Start of Offer Period : October 20, 2014
  • End of Offer Period : October 24, 2014
  • Listing Date : October 31, 2014

If you intend to purchase these Preferred Shares, you may contact your broker or the following underwriters of this transaction: BDO Capital and Investment Corporation, China Banking Corporation, RCBC Capital Corporation, SB Capital Investment Corporation, and Standard Chartered Bank.

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