The Philippine Stock Exchange (PSE) has approved the listing application of Petron Corporation for P10 billion worth of preferred shares it plans to sell via a primary follow-on public offering.

PSE documents show, Petron is listing 100 million Perpetual Preferred Shares consisting of 50 milion shares for the primary offer and another 50 million shares to cover the over-allotment option.

The shares have an indicative offer price of P100 apiece although the final offer price will be set on February 9, 2010 together with the setting of the dividend rate.

Petron said the dividend rate will be computed as the sum of the relevant base rate plus a spread of 300 to 325 basis points.

The base rate will be the prevailing Philippine Dealing System Treasury Fixing 5-year treasury securities benchmark rate under the “bid yield” as published on the PDEx Page of Bloomberg.

Petron has set the start of the offer period on February 15, 2010 and end on Feburary 26, 2010. The listing date has been tentatively set for March 5, 2010.

The preferred shares are non-voting and non-convertible with a par value of P1.00 per share and are redeemable at the option of the company. The preferred shares will also have preference over common shares in the case of the dissolution of the company.

“The proceeds from the preferred share issuance will be mainly used for capital expenditures for the company’s refinery operations and the expansion of its retail network,” Petron President Eric O. Recto said.

Petron said part of the proceeds would be used to upgrade its power generation system, which would cost approximately around P10 billion. Work will take place this year until 2012.

It will also use the proceeds for the repayment of part of its P45.6-billion short-term debt as of September, to free up credit line for working capital requirements particularly for the importation of crude oil and petroleum products.