Bangkok--Oct 27--PTT
PTT has bought total shares of Rayong Refinery Company Limited (RRC) from Shell International Holding Co., Ltd (Shell) in order to push forward its process on the debt restructuring of the refinery firm. The purchase will benefit the country’s financial status and bring about more stability on Thailand’s energy procurement as well as business synergy among PTT’s refining affiliates, which can enhance competitiveness in the long term.
At the Cabinet Meeting on October 26, 2004, Mr. Prommin Lertsuridej, the Minister of the Energy Ministry, revealed that the Cabinet has agreed on the debt-restructuring plan in RRC proposed by the Energy Ministry. Under the restructuring plan, PTT will purchase 64% stake from Shell at US$ 5 million. Having 100% ownership of RRC, PTT will work on the process of debt restructuring in order to strengthen RRC’s financial position prior to the future listing in the Stock Exchange of Thailand. The debt restructuring includes three schemes: the debt buyback to bring down total debt by US$200 million; the US$250-million subordinated loan and/or new capital injection from PTT; and a US$235- million increase in RRC’s cash projection (cash received from normal operation together with cash received from the revision of crude purchasing term from the 2-day prepaid to the new purchase condition of 30-day credit term). Upon the completion of the process, total debt of RRC will be reduced from US$1.335 billion to US$650 million, and that will automatically bring down the country’s NPL by the same amount. Therefore, the debt restructuring of RRC which benefits macro-economy as well as improves financial position of the country will thus help Thailand to attract more confidence from foreign investors. Meanwhile, PTT’s long-term competitiveness will be further strengthened.
Mr. Prasert Bunsumpun, President of PTT, said the debt restructuring in RRC will result in proper return for PTT. At the same time, it helps RRC to continue its efficient operation. Aiming to maximize the value or its refining affiliates, PTT will move forward to negotiate to merge RRC and Star Petroleum Refining Co., Ltd (SPRC) in which PTT owns a share of 36%. The two refineries are located near each other. Alternatively, PTT will seek a strategic partner to purchase shares of RRC. The move is to strengthen and create stability on PTT’s procurement operation and to create synergy among PTT’s refining affiliates having Thai Oil Plc. as the core refinery. The synergy-creation plan will allow PTT the more efficient control over its oil refining direction in order to best match PTT’s marketing plan both locally and internationally.
RRC is an advanced Hydro Cracking Refinery with the refining capacity of 145,000 barrels per day (b/d). It commenced an operation in 1996. The US$2.25-billion construction of RRC consists US$750-million equity and US$1.5-billion financing loans. RRC was previously owned by Shell (64%) and PTT (36%) respectively. Upon acquiring 100% ownership in RRC, PTT’s total refining capacity via its refining affiliates- RRC (100%), Thai Oil (49.54%), SPRC (36%), and Bangchak Plc. (8.83%), will be increased from 22% to 32 % of the country’s total capacity or from 226,774 b/d to 319,574 b/d. End.