Bangkok--21 Oct--Indorama Polymers
Siam City Securities, the independent financial advisor to Indorama Polymers Plc (IRP) has recommended the existing shareholders of the firm to take up the offer made by its parent company, Indorama Ventures Limited.
“The plan for listing of IVL is there and no matter what the outcome of the voting is IVL would be listed,” Santad Sa-Nguandeekul, the managing director for the investment banking division of SCIB Securities told the group of shareholders who were present at the meeting which was arranged to give the existing shareholders of IRP a chance to learn more about the planned tender offer of shares of IRP by its parent company IVL.
IVL has announced its plans to make a tender offer for the shares of IRP by offering 1.232 shares of IVL for every share of IRP the investors hold.
SCIB Securities said that the offer made by IVL was a fair offer as it gives the shareholders of IRP a fair deal as there is an upside potential if the for those who agree to participate in the share swap.
IRP’s shareholders are set to meet on October 27 to vote whether to agree with the tender offer terms of IVL or not.
Aloke Lohia, the chief of IVL said that the move to list the holding company was a strategic one and that it would benefit the company in the long-term as he wants to implement the same strategy he used to grow IRP with IVL as well.
IRP, which was listed on the Stock Exchange of Thailand (SET) in 2005 has seen its market capitalization increase to 17.10 billion baht from 5.2 billion baht when it listed, while the company’s capacity for producing polyethylene terephthalate (PET) has grown by 7 times its capacity when it listed.
“We have a proven strategy with IRP and we want to implement the same strategy with IVL as well,” he said in a remark he made during the opening of the event while stating that his aim was to make IVL ‘the world’s leading polyester company’.
Mr. Lohia said that the integration story was something that would be beneficial to the shareholders of IRP as it would help in increasing the margins.
He said that earlier IRP was a standalone PET producer and other businesses of purified terephthalic acid (PTA) and polyester fiber were not that strong but now times have changes and both these aspects of the business are strong and with strategic and cheap acquisitions that IVL has undertaken in the past few years it would mean that the margins for IVL as a group would far surpass the other Asian or global players.
“There was a clear vision for IRP and I can assure you that there is a similar clear vision for IVL as well,” Mr. Lohia said.
He added that the outlook for the remainder of the year continues to remain positive and the third quarter ‘so far looks good’.
Mr. Lohia also revealed for the first time the earnings of IVL which showed that the Return on Equity for the first half of the year stood at 38% against 22% seen during the same period last year, while the return on capital employed (ROCE) stood at 16% against 14% from the previous year.
As for the production capacity of IVL’s PTA business is at 1.6 million tons while IVL’s sales fro the 6-months ending June 2009 stood at 38.6 billion baht, IVL’s Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) stood at 5.8 billion baht and its net profit after minorities was at 2.9 billion baht.