PT Chandra Asri Petrochemical to hold rights issue in July 2011 to finance expansion projects

17-May-11

PT Chandra Asri Petrochemical - Indonesia’s leading petrochemical producer plans to hold a rights issue with preemptive rights for existing shareholders in July to finance expansion projects, as per Jakarta Post. The company plans to issue 20% of its shares to the public, increasing public ownership in the firm to 25% after the offering from the current 5%. The limited offering will enlarge public ownership and will also add liquidity to its shares in the stock exchange. The planned offering is subject to the approval of the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) and the company shareholders in a meeting scheduled on June 16. The rights offering is set to be carried out at the Indonesian Stock Exchange from July 1-5 with 4 standby buyers: PT DBS Vickers Securities Indonesia, Deutsche Bank AG, UBS AG and PT Morgan Stanley Asia of Indonesia. The largest stake in the firm of 66.47% is currently held by parent company PT Barito Pacific Tbk. owned by tycoon Prajogo Pangestu, while the remaining 22.87% and 5.52% are owned by Appleton Investment Ltd. and Marigold Resources Pte. Ltd. respectively. However, Barito Pacific, Marigold and Appleton are planning to sell preemptive rights to PT DBS Vickers Securities Indonesia, Deutsche Bank AG, UBS AG and PT Morgan Stanley Ltd. of Singapore, who will later offer shares to investors. 90% of the proceeds would be allocated to several development and capacity enhancement projects with the rest covering general expenditures. The projects would need a total investment of US$600 mln, partly sourced from the rights issue. He said his firm would build Indonesia’s first butadiene plant in Cilegon, Banten, in June at a cost of US$130 mln. The plant, expected to commence operation in 2013 by its subsidiary PT Petrokimia Butadiene Indonesia, is set to produce up to 100,000 tpa of butadiene for both domestic and export markets. Chandra Asri also plans to increase the production capacity of its ethylene cracker from 600,000 tons to 1 mln tons and the capacity of its polyethylene plant from 320,000 tpa to 536,000 tons until 2014. Chandra Asri would also develop Butene-1, used to produce linear low-density polyethylene. The firm recently added new machines worth Rp 300 billion to its polypropylene plant, which is expected to increase production capacity from 360,000 tons to 480,000 tpa.