Phoenix Petroleum Philippines Inc. is planning a P9 billion sale and leaseback agreement with its creditor BDO Unibank Inc. that will allow the heavily indebted company to pay back what it owes the lender and still be in a position to recover.
At Phoenix Petroleum’s annual stockholders’ meeting Thursday, Igna Braga, officer-in-charge and chief finance officer, said the transaction covers some of its assets, including terminals, depots and retail stations.
“The corporation is currently in the process of streamlining 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. The key objective is to bring back the company to a healthy financial position and regaining its strong market position that it enjoyed pre-pandemic,” Braga said.
Braga said involved in the negotiations are the company’s creditor banks and suppliers looking “for mutually acceptable debt servicing agreements and on a case to case basis, divesting certain assets which have the effect of either raising capital for operations or reducing debt.”
Braga said the transfer of assets will allow Phoenix Petroleum to generate over P9 billion from the transfer of assets which are then applied against its obligations and reduce its debt.
But BDO agreed to lease back to Phoenix Petroleum the transferred assets, ensuring the company is able to use the terminals and the depots through a lease agreement.
“The proposed sale and lease back also grants the company the exclusive right to repurchase the asset within three to five years from the time of sale when the company is in a better position to purchase them either fully or partially at the company’s discretion,” Braga said.
Meanwhile, Henry Albert Fadullon, Phoenix Petroleum president, said that under the deal with BDO, the oil firm will also get the right to repurchase them within three to five years from the time of the sale.
Earlier this week Phoenix Petroleum also said it will raise as much as $19,210,000 (P1.09 billion) from its divestment of stakes in its Singapore-based trading arm, PNX Petroleum Singapore Pte. Ltd. (PNX SG).
Phoenix Petroleum divested 85 percent stakes from PNX SG through a share buyback by the latter.
