LISTED independent oil firm Phoenix Petroleum Philippines, Inc. is looking at entering into a sale-and-leaseback agreement with BDO Unibank, Inc. to restructure its debts.
“The corporation is currently in the process of streamlining its operations, restructuring its debts and identifying potential sources of liquidity in order to generate cash flow to settle its obligations or generate some liquidity for working capital,” Ignacia S. Braga IV, officer-in-charge chief finance officer and treasurer of Phoenix, said during the company’s annual stockholders meeting on Thursday.
Ms. Braga said that the assets involved in the proposal are some terminals, depots, and retail stations.
“The restructuring will allow the company to receive over P9 billion for the transfer of the assets, which will be applied to its current obligations and reduce its debt,” Ms. Braga said.
She said BDO had agreed to lease back to the company the same set of assets “in the process of ensuring the company is still able to use the terminals and the depots.
Henry Albert R. Fadullon, president and chief executive officer of Phoenix, said the assets are under an exclusive leaseback arrangement, which grants the company the right to repurchase them within three to five years from the time of the sale.
“For avoidance of doubt, while the corporation is seeking authorization for such disposal of assets, these arrangements are subject to certain conditions. Some of these [are] regulatory,” Ms. Braga said.
“Likewise, the timing or certainty of the disposal of the assets are subject to different possible outcomes that could provide alternative sources of liquidity such as potential new credit facilities of new capital by way of new equity,” she added.
Mr. Fadullon said the fuel segment of the business had experienced challenges during the first half due to work capital limitations.
“The sustained impact of geopolitical tensions in the global market has derailed our intentions to restore the business. Fortunately, our capital-light supply model has been essential in keeping operations sustainable,” he said.
Meanwhile, he said the company’s downstream oil sector “continues to be a fundamental component of the economy.”
“We believe that once we obtain the working capital support to revitalize this part of our portfolio, we will be in a better position to address the demands of our customers.”
On Monday, Phoenix told the local bourse that its board of directors had approved its divestment from its Singapore-based subsidiary PNX Petroleum Singapore Pte. Ltd.
Its board also approved last month the authority for its management to transfer, sell, and dispose of certain corporate properties, assets, and investments.
The move is in line with the company’s financial management program as part of its debt management and funding activities.
In the second quarter, Phoenix Petroleum incurred an attributable net loss of P1.097 billion, reversing its P143.48 million net income in the same quarter last year.
Revenues fell by 63.2% to P14.6 billion from P39.7 billion previously.
At the stock exchange on Thursday, shares in the company went up by P0.44 or 7.91% to close at P6. — Sheldeen Joy Talavera