THAI OLEFINS （ＴＯＣ）
（Bangkok Posts 2002/1/26）
THAI OLEFINS Finances improving
Loans, PTT equity pave way for growth
Thai Olefins Co has succeeded in tapping a total of 21.56 billion baht from credit lines and shareholder equity to fund its debt refinancing and investment expansion.
Of the total, 18.34 billion baht came from a loan from nine local financial institutions and 3.22 billion baht or US$70 million would be injected by PTT Plc, which currently holds a 49% stake in the olefins producer.
Thai Olefins plans to increase ethylene production by 300,000 tonnes a year, from 385,000 tonnes at present, once its finances are in order.
Improved efficiency and reduced costs would help the company compete internationally, without the need to spend $700 million on a new plant.
The agreement between Thai Olefins and the nine lenders was sealed yesterday. Krung Thai Bank is contributing 8.36 billion baht; Bank of Ayudhya, Thai Military Bank, Siam Commercial Bank and BankThai 1.19 billion each; Export and Import Bank of Thailand, Bangkok Metropolitan Bank and Siam City Bank 998 million each; and SG Asia Credit Securities 599 million.
Funds equivalent to $76 million will be used to refinance outstanding debt of $250 million borrowed from foreign banks, including the export-import banks of the United States, Japan and Korea to fund construction of the company's olefins complex.
The new loan will reduce foreign-exchange risks and help Thai Olefins build up a war chest to increase its competitive potential and liquidity. The repayment period runs until 2011.
Another $74 million will be used to expand ethylene production, which will cost $144 million. The remaining $70 million will come from PTT Plc.
Pichai Chunhavajira, the PTT senior executive vice-president, said the PTT board on Thursday agreed to allow the company to inject $70 million into Thai Olefins. After the capital increase, PTT's stake in the company would rise to 63.3% from 49%.
Mr Pichai said PTT had also agreed to guarantee the purchase of 240,000 tonnes of ethylene from the additional 300,000 tonnes of production planned by Thai Olefins Co.
As well, PTT is obliged to provide up to $100 million in trade credits to Thai Olefins under normal terms and conditions.
The expansion will be completed by 2004, coinciding with the projected upward cycle for petrochemicals.
PTT the Petroleum Authority of Thailand
PTT is a major shareholder in two refining companies: Thai Oil Co.,Ltd. and Bangchak Petroleum Public Co.,Ltd. which ensure consistent supplies. In order to fulfill the growing demand for oil products, the government in 1990 granted permission to establish two more refineries i.e. Rayong Refinery Co.,Ltd. (145,000 b/d capacity) and Star Petroleum Refining Co.,Ltd. (130,000 b/d refining capacity). PTT is holding a 36% interest in each. The new refineries are to start operations in 1995 and 1996 respectively.