Petron Corporation’s Series 4D and 4E Preferred Shares
This communication should be read as an introduction to the Preliminary Offer Supplement. Please be advised that the final terms and conditions of the Offer shall be set forth in the final offer supplement after securing the required regulatory approvals from the SEC and the PSE. Subject to the issuance of the Permit to Sell for the Offer by the SEC, the final offer supplement, as filed with the SEC and PSE, shall be the only approved selling materials for the Offer..
Overview
Petron Corporation (“Petron” or the “Company”), is the only integrated oil refining and marketing company in the Philippines and is a leading player in the Malaysian market. The Company had an overall market share of approximately 24.5% of the Philippine oil market for the year ended June 30, 2023 in terms of sales volume based on Company estimates using its internal assumptions and calculations and industry data from the Philippine Department of Energy (“DOE”).
Petron is also a leading player in the Malaysian market. The Company entered the Malaysian market in March 2012 through the purchase of ExxonMobil’s downstream oil business in Malaysia. For the period ended December 31, 2023, the Company ranked third in the Malaysian retail market with more than 21% market share.
Key Investment Highlights:
- Petron is the only Refinery in the Philippines
- Market Leadership in the Philippine downstream oil sector with a total retail market share of 36.3% of the Philippine oil market as of June 30, 2023
- Logistically advantaged supply position in the Philippines
- Operations in markets with favorable industry dynamics
- Expanded product offering driving non-fuel retail volumes
- Enhanced loyalty card program in the Philippines and successful rollout of the Petron App
- Established position in the Malaysian downstream oil sector; and
- Experienced management team and employees and strong principal shareholder in San Miguel Corporation
Key Investment Risks:
- Volatility of the price of crude oil and petroleum products
- Outbreak of any other highly infectious or contagious diseases;
- Reliance primarily on a number of suppliers for a significant portion of its crude oil requirements in the Philippines and Malaysia;
- Intense competition, increasing presence of electric vehicles, and cyclicality in global and regional refining capacities;
- Preferred Shares may not be a suitable investment for all investors;
- Preferred Shares are perpetual securities and investors have no right to require redemption.
Indicative Timetable
| Bookbuilding Period | [Until August 28, 3:00 p.m.] |
| Initial Dividend Rate Setting Date | [Week of August 29, 2024] |
| Public Offer Period | [September 5 – 13, 2024] |
| Issue and Listing Date | [September 23, 2024] |
*The above indicative timetable is subject to change depending on, among others, market conditions, the timing of regulatory approvals required for the Offer, and other relevant circumstances.
Indicative Terms and Conditions
| Issuer | Petron Corporation |
| Issue Size | Up to PHP13,000,000 Series 4 Preferred Shares with an oversubscription option of up to PHP4,000,000 Preferred Shares |
| The Offer |
Petron Corporation’s Series 4D (PRF4D) Petron Corporation’s Series 4E (PRF4E) |
| Use of proceeds | The net proceeds of the Offer shall be used to redeem the Series 3A Preferred Shares, refinance maturing obligations, and fund general corporate purposes, including the purchase of crude oil inventory. |
| Offer price | PHP 1,000.00 per share |
|
Form and Denomination Booking
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Booking via TRUST: Minimum of 100 Offer Shares (PHP100,000), and thereafter, in multiples of 10 Offer Shares (PHP10,000). *Trust fee applies if booking is via DIMA (0.20% DIMA fee) Existing DIMA fee rate to apply for existing clients Booking via FISD: Minimum of 50 Offer Shares (PHP50,000), and thereafter, in multiples of 10 Offer Shares (PHP10,000). |
|
Petron Corporation’s Series 4D: Non Call 3 Step Up 5 Petron Corporation’s Series 4E: Non Call 5 Step Up 7 |
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| Initial Dividend Rates |
SERIES 4D PREFERRED SHARES: PRF4D – 6.8364% SERIES 4E PREFERRED SHARES: PRF4E – 7.1032% |
| Dividend Payment | Quarterly, calculated based on a 30/360-day count basis |
| Optional Redemption |
Series 4D: Option to redeem in whole (but not part) of the Offer Shares on the 3rd anniversary of the Issue Date or on any Dividend Payment Date, thereafter Series 4E: Option to redeem in whole (but not part) of the Offer Shares on the 5th anniversary of the Issue Date or on any Dividend Payment Date, thereafter |
| Dividend Rate Step Up |
Series 4D: On the 5th Anniversary of the Issue Date Higher of the (i) applicable Initial Dividend Rate; or (ii) the 3-day simple average of the 7-year BVAL plus 3.25% Series 4E: On the 7th Anniversary of the Issue Date Higher of the (i) applicable Initial Dividend Rate; or (ii) the 3-day simple average of the 10-year BVAL plus 3.25% |
| Taxation | Dividend income subject to 10% FWT for Philippine citizens; tax-exempt for domestic corporations |
| Listing | The Philippine Stock Exchange, Inc. |
Frequently asked questions
What are SEC-Registered Perpetual Preferred Shares?
SEC-Registered Perpetual Preferred Shares are publicly-listed equity securities wherein investors have preferential claim on the earnings, in the form of dividends, and on the assets of a company upon liquidation compared to common shareholders.
Why invest in SEC-Registered Preferred Shares?
Higher dividend yield
Provides higher yield compared to fixed income securities (e.g., retail bonds) due to equity premium.
Preference in dividends
Has priority in dividend payments over common shareholders.
Priority of claim upon liquidation
Provides its holders with priority claim on a company’s assets upon liquidation versus common shareholders.
Lower tax rates on dividends
Subject to lower final withholding tax for retail (10%) and none for corporate investors vis-à-vis fixed income securities (e.g., retail bonds) (20%).
You may search for your nearest branch (www.securitybank.com/map) and inquire about the guidelines for subscribing to the Preferred Shares from any account officer. You may also send us your branch of account so we can ask them to directly coordinate with you via e-mail or mobile. Any decision to invest in the securities should be based on a consideration of the Preliminary Offer Supplement, including risk factors, as a whole by the investor.
DISCLAIMER: A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR OFFERS TO BUY THE SAME BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS AND OFFER SUPPLEMENT IS SUBJECT TO CHANGE/COMPLETION AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR BE CONSIDERED A SOLICITATION OF AN OFFER TO BUY.
For more details, kindly contact the following:
Daisy Garcia – [email protected]
Mia Bueno – [email protected]