PSO to acquire 4.5% shares in PRL

PSO to acquire 4.5% shares in PRL

Pakistan State Oil’s (PSO) Board of Management has approved that PSO shall exercise its pre-emption right to acquire shareholding of Chevron Global Energy Inc (CGEI) in Pakistan Refinery Limited (PRL) to the extent of 4.5% of the shareholding equivalent to 1,575,000 shares. Presently, CGEI total shareholding in PRL stands at 12%.

PSO’s perspective

PSO already holds 18% stake in PRL, where acquisition of another 4.5% stake will take its total shareholding to 22.5%. We believe PSO is raising its stake to have a higher degree of influence on PRL by making it its associate. PSO is likely to report a share of PRL profits in its P&L once the transaction goes through. The same will also confirm PSO’s source of fuel supply, which could potentially been under threat had Pak Arab Refinery (PARCO) acquired CGEI shareholding in PRL. Recall that PARCO has its own marketing arm (TPPL) and had recently acquired Chevron Pakistan (Caltex). The acquisition of shares of PRL could potentially lead to a manageable cash outflow of Rs208mn or Rs0.85/share (based on PRL’s last closing price) for PSO.

PRL’s perspective

PSO will not be required to offer a tender off to acquire additional shares since its cumulative shareholding will be less than 25%, as per the Listed Companies’ Takeover Ordinance.