The Caltex (ASX: CTX) share price is up 5.5% after announcing plans for a property IPO.
Caltex Australia is known for the popular fuel and convenience stores. The multi-billion dollar company also operates in the petroleum industry by buying, refining and distributing fuel products throughout Australia. It’s been in the business more than 100 years.
Caltex’s IPO Plans
Caltex has proposed an IPO up to a 49% interest in 250 freehold sites. These 250 sites represent all of the freehold sites within the identified core network of 500 sites.
The company is also progressing the sale of 50 metropolitan freehold sites identified as having a higher value through alternative use.
By only selling a 49% stake it would mean Caltax retains a majority interest and having operational control of the core convenience retail network.
Caltex expects that the property trust would receive rental payments from Caltex of around $80 million to $100 million in the first year.
Caltex CEO and Managing Director Julian Segal said: “Caltex is focussed on unlocking value in our portfolio for shareholders and the segmentation of our network following our convenience retail network has allowed us to consider a range of options to released capital from our high-quality property assets.”
Caltex Trading Update
In another ASX release the petrol business announced a trading update to the market.
Convenience Retail EBIT (click here to learn what EBIT means) is expected to be in the range of $190 million to $210 million, which would be an increase of $20 million to $40 million compared to the first half of 2019 which was driven by an improvement in fuel margin. It also led to increased market share.
In October 2019 its Caltex refiner margin was US$12.01 per barrel with the Caltax Singapore Weighted Average Margin (WAM) of US$15.61. The strong WAM conditions were partly offset by rising landed crude oil premiums and lower yield as is typical in warmer months. Full year 2019 sales from production guidance is unchanged from 5.5BL.
Caltex will provide another update about its business at its upcoming investor day.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.