MANILA (Oct 20): Philippine oil refiner Petron Corp on Monday began offering non-voting, non-convertible preferred shares in two tranches, seeking to raise up to 10 billion pesos ($223 million), IFR reported.

The Series 2A non-call 5 preferred shares pay a fixed dividend of 6.3000 percent per annum, and the Series 2B non-call 7 preferred shares pay 6.8583 percent, said IFR, a Thomson Reuters unit.

Both tranches priced at the tight end of guidance: the 2As at 250 basis points over the 5-year PDST (Philippine Dealing System Treasury) benchmark, from a range of 250-300 bps, and the 2Bs at 300 bps over 7-year PDST, from guidance of 300-350 bps, IFR said.

The offering comprises 7 million preferred shares at 1,000 pesos each, with an option to increase it to 10 million shares. IFR said Petron is expected to raise the full amount, following a strong response in institutional bookbuilding.

If the Series 2A notes are not called on the fifth anniversary, the dividend will step up to the higher of the initial dividend rate and the step-up rate, which is the average of the 7-year PDST-R2 plus 3.75 percent, IFR said.

The step-up rate for the Series 2B notes at the seventh anniversary is the average of the 10-year PDST-R2 notes plus 4.50 percent. Petron can elect to defer dividend payments, IFR said.

Proceeds from the offering, which runs until Friday, will be used primarily to redeem the company's outstanding preferred shares, which are callable from March 5, 2015.

Standard Chartered is joint global co-ordinator. It is also joint bookrunner with BDO Capital and Investment, China Banking, Rizal Commercial Banking and SB Capital. First Metro Investment, Philippine Capital, ING and United Coconut Planters Bank are underwriters.