TPI will continue as a separate entity post-acquisition

21-Jul-05

Despite strong opposition from Thai Petrochemical Industry's founder, Prachai Leophairatana, the deal to take over the country's largest corporate debt defaulter seems poised for a finish. It now seems certain that PTT Plc will emerge as the winner in the acquisition of 61.5% of Thai Petrochemical Industry. After it takes management control under the debt restructuring plan, PTT Plc does not plan to consolidate TPI with its existing petrochemical business units, as this would require full collaboration from all parties concerned, including PTT subsidiaries, Thai Olefins Plc and The Aromatics (Thailand) Plc. However, good synergy would be developed between TPI's and PTT's petrochemical operations in terms of reducing the costs of crude oil procurements, feedstock management, trading of products and marketing activities. TPI's production improvement budget of US$400-500 million could see an increase, as improvements seem essential on some of TPI's facilities which weren't included in an earlier assessment. PTT, Thailand's energy conglomerate along with 4 other state-controlled entities have secured a deal brokered by the Finance Ministry to take a 61.5% in TPI in lieu of management control of the company. The PTT-led group is scheduled to take control of TPI in September when the deal to sell shares held by TPI in its cement subsidiary, TPI Polene, is completed. Proceeds from the sale would be used to reduce TPI's debts. The four state-controlled entities are the Government Pension Fund, Vayupak Fund, Government Savings Bank and Government Housing Bank. By the end of the year, PTT is set to merge Thai Olefins (TOC) with National Petrochemical (NPC) to set up PTT Chemicals Co to manage its petrochemical business, including Aromatics (Thailand) and possibly TPI.