San Miguel to spend $1.2b on Esso upgrade

Date:2011-09-02lile  Text Size:

Kuala Lumpur: San Miguel, the Philippines' biggest listed company by sales, may spend as much as $1.2 billion (Dh4.40 billion) upgrading Esso Malaysia's oil refinery and renovating its gasoline stations.

As much as $1 billion may be invested in the refinery in Port Dickson, Malaysia that may include a petrochemical plant, San Miguel director Eric Recto said by email yesterday. Renovating the gasoline stations will cost $200 million, President Ramon Ang said in a mobile-phone text message.

"We want to invest in new equipment to upgrade the refinery to enable it to improve its conversion capability and maximise" its 88,000 barrels-per-day capacity, Recto said. "The current operation is cash generating which would help fund part of the total financing."

San Miguel agreed to acquire ExxonMobil's 65 per cent stake in Esso Malaysia for $206 million, according to a Kuala Lumpur stock-exchange filing on August 17. The food and beverage company that's expanding into faster growing industries including mining and power retailing plans "bigger" acquisitions in the region and is looking at energy assets in Indonesia and Australia, President Ramon Ang said.

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Business Times reported the planned oil-refinery expenditure earlier yesterday.

San Miguel, majority shareholder in Petron, the Philippines' largest oil company, paid 3.50 ringgit a share, or 29 per cent less than Esso Malaysia's closing price before the deal was announced. The acquisition will be financed by San Miguel's recent fund raising, Recto said.

Share performance

Esso Malaysia was unchanged at 3.63 ringgit in Kuala Lumpur trading yesterday and has lost 27 per cent since the terms of the transaction were announced. The stock initially rose on August 17 after Reuters reported the deal without providing a purchase price.

The company which started while the Philippines was still a Spanish colony, will also acquire all of unlisted ExxonMobil Malaysia and ExxonMobil Borneo for a combined $403 million, according to the Kuala Lumpur filing.

San Miguel fell 0.2 per cent to 123.80 pesos in Philippine trading Thursday.

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