Bangkok--Jan 18--PTT
Mr.Prasert Bunsumpun, President of PTT Public Company Limited (PTT); and Mr.Suparat Kawatkul, the Permanent Secretary of the Ministry of Finance (MOF), in its capacity of an agent authorized by the TPI Business Reorganization Plan (Plan) to select and allocate TPI shares to new qualified investors, have entered into a Memorandum of Understanding (MOU) to conduct a detailed study and extensive due diligence of Thai Petrochemical Industry Public Company Limited (TPI) and its subsidiaries. If the study and the conditions of investment are satisfactory, PTT will make an investment of approximately 30 percent ownership interest in TPI with an aim to utilize potential synergies to further strengthen PTT’s business in the petrochemical sector.
Mr.Prasert revealed that the primary purpose of MOU is to record mutual understanding and also major principles and conditions of PTT’s investment in TPI which in effect will enable PTT to conduct prudent and careful due diligence in TPI and subsidiaries with full transparency. This MOU is not a definitive share purchase agreement and TPI share price in the transaction has not been determined yet. Given TPI’s complicated business structure, it is imperative to conduct extensive due diligence prior to any discussion and negotiation of TPI valuation.
To evaluate this potential investment, PTT has engaged Phatra Securities Company Limited and Citigroup Global Markets Limited as domestic and international financial advisors respectively, Linklaters (Thailand) Limited as legal counsel, KBC Advanced Technology Pte Ltd as technical consultant, and PricewaterhouseCoopers FAS Ltd. as independent auditor.
In the evaluation of investment in TPI, PTT needs to study the direction, strategy, business plan and also the returns to PTT’s shareholders in the long run. PTT will evaluate whether or not the proposed transaction will enable PTT to meet its required Internal Rate of Return (IRR). In addition, PTT must obtain a management role in TPI and its subsidiaries to ensure that the companies will be successfully revived and become competitive after being released from the reorganization process. The most crucial factor is that PTT needs to evaluate and manage the risks associated with investment in TPI to an acceptable extent in order to ensure that this investment in TPI will create maximum benefits to shareholders of PTT.
Provided the outcomes of due diligence and all conditions imposed by PTT are satisfactory, TPI share price in the transaction is acceptable, and PTT receives necessary supports from related parties, PTT will decide to buy TPI shares in which it will be an opportunity for PTT to expand further into a fully integrated petrochemical business on back of TPI business platform and potential synergies at present which can be mutually supportive and collaborative from many aspects such as procurement of crude and feedstock, marketing and trading of refined oil and petrochemical products.
If PTT decides to make investment in TPI, the payments for TPI shares will take place upon termination of the Plan and satisfaction of all conditions precedent, which should be around end of 2005 according to the Plan. End.