Davao-based businessman Dennis Uy is looking to sell Phoenix Petroleum, the country’s third-largest oil player, as the petroleum industry continues to feel the effects of the COVID-19 pandemic.
In a report by the Philippine Daily Inquirer on Monday morning, Uy said he was “open” to selling either a controlling or minority stake in the company, which took on an aggressive expansion in recent years, resulting in huge earnings but also huge debts.
Uy — founder, President, and CEO of Phoenix — further said that while a final decision has yet to be made, potential new investors would provide the oil firm with a “stronger balance sheet and higher EPS” or earnings per share.
Phoenix later issued a clarification in a disclosure to the Philippine Stock Exchange.
“The company clarifies that the statement of Mr. Uy was in answer to the question pertaining to his willingness or openness to sell any of his businesses in the group to which he answered that the company has always been open to investors willing to invest in the company and who believes in the company’s business and can add value to its operations, finances and value of it stocks,” the disclosure read.
Phoenix’s network of service stations reached 665 last year, edging out Chevron to become the country’s third-largest oil company.
Uy, a major campaign donor of Pres. Rodrigo Duterte in the 2016 elections, controls 45% of the Malampaya gas-to-power project through Udenna Corporation — Phoenix’s holding firm — and is among those interested to buy the other 45% owned by Shell Philippines Exploration B.V.
Phoenix also launched an aggressive acquisition campaign, buying liquefied petroleum gas company Petronas Energy Philippines in 2017 and the local Family Mart convenience store chain in 2018. However, lenders began worrying about the company’s increasing debts.
The Philippine Rating Services Corporation (PhilRatings) raised concerns in a July 2020 report, wherein it pointed to Phoenix’s increasing interest expenses and declining profit margins. The oil firm’s total debt as of the third quarter last year stood at Php49.2 billion, Php37.8 billion was current or due within a year. Phoenix’s business difficulties were further aggravated by the COVID-19 pandemic.