Indonesia fits Titan expansion plan

06-Feb-06

Titan Chemicals Corp Bhd's proposed acquisition of PT Petrokimia Nusantara Interindo (PT Peni) seems to be the first in line of many for the company's expansion plans as it views Indonesia as a perfect destination. Titan has a current polymer capacity of about 945,000 tpa. The new Indonesian subsidiary will boost Titan's polyolefin capacity by about 50%. Indonesia's large population base as well as low current plastics consumption makes it one of the most important future markets in Asia. Indonesia has a per capita polyolefin consumption of 6 kg pa compared with 46kg pa in Malaysia, and 200kg pa in the US and Germany The Indonesian government is committed not just in developing the economy, but also making it more business friendly and competitive in the petrochemical and high technology sectors. The cultural affinity between the two countries also makes it a logical fit for Titan's business Titan has proposed to buy PT Peni by paying US$20 million (RM75 million), cash and another US$58 million (RM217.5 million), by either facilitating negotiation between PT Peni and its lenders to repay a debt of up of US$58 million (RM217.5 million) or by buying shares in Chemical Brothers, PT Peni's shareholder, with PT Peni continuing to service the debts. The deal is also viewed by analysts as Titan's stepping stone towards other acquisitions in the country, especially Indonesia's second largest petrochemical firm PT Chandra Asri.