Thai Olefins to sell $300M bonds for business expansion

04-Jun-05

Thai Olefins PCL (TOC.TH) is planning to start the construction of a second ethylene oxide-ethylene terephthalate (EOET) plant next year with a view to completing it by 2008. It plans to sell above US$300 million in dollar-denominated bonds to foreign investors and use part of the proceeds to refinance its THB10 billion three, five and seven year bonds, which will gradually mature over the next 4 years. The rest will be used to match expenses in terms of dollar and to finance further business expansion. Oil and gas giant PTT PCL (PTT.TH) holds 49.5% in Thai Oil and 44.9% in Thai Olefins. Citibank Inc. and Deutsche Bank AG are appointed as the deal's financial advisers and underwriters. The petrochemical company expects its revenues and profit to decline in Q2 due to slides in its product spread margin. From April to June, olefins prices dropped by over US$200 per ton from the levels of US$900 in the previous quarter and spread margins narrowed to $250-$300 per ton from $400. The fall in the petrochemical price was triggered probably by concerns over the possible revaluation of the Chinese yuan which caused clients to roll back their purchasing orders while waiting for a clearer indication of the direction of global currencies.