Blaming the slow progress of negotiations and the complexity of the deal, Hong Kong-listed Citic Resources has ended talks with Prachai Leophairatana, TPI's founder and former controlling shareholder for takeover of TPI. This brings to an end a last ditch effort by Mr Prachai Leophairatana, who built south-east Asia's largest integrated petrochemical complex, to foil a PTT takeover of the business. Prachai TPI's founder and former controlling shareholder had teamed up with Citic to buy the 75% stake of TPI held by the company's creditors. Though the Government granted permission to Citic to proceed with the review of TPI, they rejected the petition to halt the imminent sale of the TPI stake to the PTT-led consortium until Citic completed its own due diligence. It was declared that this decision would not in any way obstruct the PTT takeover, which is due to be completed by August. The blame can be singled out on the delays in obtaining Thai court approval to conduct due diligence on TPI's books. Earlier Citic had described the TPI complex as an "excellent project" that could help fulfill China's strong demand for petrochemical products.
A committee appointed by the Thai finance ministry, which is overseeing TPI's $2.7bn debt restructuring, will favour the transaction that involves PTT, the Thai state oil and gas conglomerate, leading a takeover of TPI, expected to be complete by mid September. Since 2003, the Thai government has sought to resolve the contentious restructuring battle over TPI, Thailand's largest corporate defaulter after the Asian financial crisis. Under the government's plan, PTT is leading a consortium of state-linked investors in taking a 61% in an expanded TPI capital base, raising US$1.4bn for immediate debt repayment. The remaining debt will be repaid over a decade.
TPI emerged from the 1997 Asian financial crisis as Thailand's largest single debt defaulter with over US$3.7bn in debts. Initially, Mr Prachai and his creditors tried to reach an amicable agreement to restructure the firm's debts, but failed. Creditors managed to install their own nominees to run the company and develop a debt work-out, but Mr Prachai filed more than 40 legal challenges that virtually paralysed the restructuring. Eventually, the bankruptcy court removed the creditor-backed planners and called upon the Thai government to step in, with its own nominees, to oversee the work-out. In financial 2004, TPI recorded ebitda of $540m, after an upturn in the petrochemical cycle and easier access to capital
20-Jul-05 
