China International Trust & Investment Corp., the government's overseas investment arm, is in talks to buy 75% stake in Thai Petrochemical Industry Pcl, challenging a Thai government takeover bid. This acquisition is in line with China's overseas expansion plans to satisfy rising demand for petrochemicals. Thai Petrochemical in 2004 reported its biggest annual profit in 6 years on higher sales, produces refined products such as diesel, gasoline and other fuels.
Citic Resources' plan to takeover Thai Petrochemical needs approval from Thailand's Central Bankruptcy Court as the company has been under management of the finance ministry since 2003 under the bankruptcy court's order. The bankruptcy court order issued on May 25 gives the company 90 days to raise the money and pay the debt of US$2.7 billion. A sale to Citic would let founder Prachai Leophairatana ward off government plans to buy the company's stock at a third of the market price. The stake is worth 81.4 billion baht (US$2 billion), based on yesterday's closing market price.
The timely intervention by Citic helps the company gain more time for negotiations with the Thai government and exert greater pressure on the government to raise the value of the offer. Citic will set up a team of about 20 people for a due diligence, estimated to arrive at a conclusive agreement to pay off the company's debt within three months.
The move would nullify an agreement yesterday between creditor banks and the government to force Thai Petrochemical to sell new and existing shares to PTT Pcl, Thailand's biggest energy company, and other government-run companies. Under yesterday's agreement, PTT would buy 31.5% of Thai Petrochemical. The Thai Government Pension Fund, Vayupak Fund and Government Savings Bank, planned to buy 10% each. The deal would allow them to acquire existing shares and new shares, representing 90% of Thai Petrochemical's enlarged capital.
02-Jun-05 
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