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Phoenix negotiates sale-leaseback deal with BDO to restructure debt

Phoenix Petroleum [PNX 6.00 unch; 0% avgVol] [link] and BDO [BDO 128.50, down 0.4%; 55% avgVol] announced that the two parties had negotiated a sale-leaseback agreement to restructure PNX’s outstanding debt. PNX said that the agreement, which covers unspecified “terminals, depots, and retail stations”, will provide PNX with P9 billion that it will use to meet its current debt obligations and reduce its overall indebtedness. The terms of the agreement were not made public, but BDO did say that PNX will have the exclusive right to repurchase the assets in 3-5 years from BDO “under certain terms and conditions”.

MB bottom-line: This is a real-life example of that famous saying: “If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” PNX has been circling the drain for basically a full year, and it seems like BDO decided to get out in front of the problem and throw PNX a lifeline. The sale-leaseback converts some of PNX’s P32 billion in non-current assets in the Property, Plant, and Equipment account, and applies that to gain a little breathing room from its P29 billion in current loans. The move is just one of several that PNX will likely need to make to keep the lights on since the company is still drowning in various debts and obligations. Even after this deal, PNX will still have at least P40 billion in current liabilities and P70 billion in non-current liabilities. It’s not yet clear how this sale-leaseback will alter PNX’s income statement, which showed that it is losing P1 billion per quarter as of the company’s Q2 Quarterly Report.


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