Bangkok--8 Oct--Moody's Investors Service
Moody's Investors Service has placed the
issuer and senior unsecured ratings of Aromatics Thailand Public Company
Ltd (ATC) on review for possible upgrade. The rating action is in
response to the proposed merger between ATC and Rayong Refinery Public
Company Ltd (RRC).
The debt securities affected by this rating action are:
Senior Unsecured Notes - $300 million (5.5% p.a.) due 20 July, 2012
"The merger of ATC and RRC will create a stronger company with enhanced
business and financial profiles", says Terry Fanous, Senior Vice
President. "The merged entity will benefit from significant vertical
integration through the ownership of a substantial and efficient oil
refinery", Fanous adds.
"The merger will also provide crucial earning diversity, particularly
given the strength of the refining sector overall", Fanous says, adding
"such diversity should lessen the volatility that had characterized ATC's
earnings in recent years".
Furthermore, the decision to place the rating on review for upgrade
reflects Moody's expectation that financial leverage and debt coverage
measures of the merged entity will be stronger than that of ATC,
reflecting RRC's strong balance sheet.
The review will focus on the ultimate capital structure of the merged
entity, any synergy benefits likely to be derived from the proposed
merger, and the capital investment program and financial policy of the
merged group.
ATC's rating incorporates the joint default analysis (JDA) being applied
to government related entities. The review will consider the level of
support from PTT Public Company Ltd (the support provider under JDA),
which is currently assessed as medium.
Moody's expects to conclude the review following registration of the
merged company, currently scheduled for the end of December, 2007.
ATC, based in Thailand, is a petrochemicals company involved in the
production of benzene, paraxylene, orthoxylene, and mixed xylenes, with
an overall production capacity of 1.19 million tones per annum. Listed on
Thailand's stock exchange, ATC is 49.1% owned by PTT.
RRC owns a single complex refinery in Thailand's Rayong Province. It has
a production capacity of 145,000 barrel per day (bpd). The company is
listed on Thailand's stock exchange and is 48.7% owned by PTT.
Sydney
Terry Fanous
Senior Vice President
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100