TOP Invests THB40 Billion to Acquire 15% Stake in Indonesia’s Largest Petrochem Producer

Thai Oil Public Company Limited (TOP) has announced the company’s direct investment (through right offering) in PT Chandra Asri Petrochemical Tbk (CAP), which is the premier petrochemical producer with an integrated plant incorporating world class, state of-the-art technology and supporting facilities in the Republic of Indonesia, the ASEAN’s largest and high-growth chemicals market. It operates the country’s only naphtha cracker producing high quality olefins and polyolefins and is the sole domestic producer of styrene monomer and butadiene.

The investment will be made through a newly established subsidiary company (the Newly Established Subsidiary Company), up to 15.38 percent of CAP’s total shares (the Share Acquisition Transaction), where the investment proceeds to CAP will be exclusively used for the investment in the development and construction of a petrochemical plant by PT Chandra Asri Perkasa (CAP2), a wholly-owned subsidiary of CAP.

CAP’s major shareholders, PT Barito Pacific Tbk, Marigold Resources Pte. Ltd., and Pak Prajogo Pangestu (jointly the Barito Group) and SCG Chemicals Co., Ltd., fully support CAP’s rights issue and the development and construction of a petrochemical plant of CAP2.

 

Accordingly, Barito Group will transfer its rights to subscribe to newly issued shares of CAP to TOP, while SCG Chemical Co., Ltd., intends to exercise its rights to subscribe to newly issued shares.

TOP stated that it will partially fund the Share Acquisition Transaction by entering into a facilities agreement with PTT Public Company Limited (PTT), which is a connected person of the company (the Facilities Agreement), to set out the binding agreements in principle of the parties in relation to financial assistance from its major shareholder (the Receipt of Financial Assistance Transaction) in accordance with the resolutions of the Board of Director’s Extra Meeting No. 2/2021, held on May 21, 2021, and the Board of Director’s Extra Meeting No. 4/2021 held on July 23, 2021.

 

The Share Acquisition Transaction will not exceed USD 1,183 million or approximately THB 39,116 million (33.0652 Thai Baht to 1 US Dollar).

 

CAP is the largest integrated petrochemical producer in the Republic of Indonesia with a long-proven track record having been in the business since 1992. In 2019, CAP has a market share of approximately 50 percent, 30 percent and 32 percent of the domestic market for olefin, polyethylene, and polypropylene, respectively. It also has a large captive distribution network and benefits from economies of scale of its feedstock sourcing, giving it significant cost efficiencies. There is also significant growth opportunity from the development and construction of a petrochemical plant of CAP2 which will be a global scale petrochemical complex built to meet the local demand in the Republic of Indonesia

 

The Share Acquisition Transaction provides opportunities for additional commercial collaborations between the Company and CAP. The company has entered into a Feedstock Sales and Purchase Agreement with CAP to supply naphtha and liquefied petroleum gas to CAP and CAP2 for up to approximately 1,050,000 metric tons per year subject to the pricing and other arm’s length commercial terms.

 

In addition, the company has also entered into a Distribution Agreement to distribute up to approximately 176,000 metric tons per year of polymer resins and up to approximately 124,000 metric tons per year for other liquid products produced by CAP and CAP2, subject to the terms being arm’s length.

 

Moreover, the Board of Directors approved the establishment of PT TOP Investment Indonesia, a Newly Established Subsidiary Company located in the Republic of Indonesia with a registered capital of IDR 10,000,000,000 (equivalent to approximately USD 700,000) to invest in CAP.

 

TOP expected the Right Offering to be completed before September 30, 2021.