29 April 2005 11:24 [Source: ICIS news]
SINGAPORE (CNI)-Thailand's biggest energy company PTT Plc has secured approval from its board of directors to buy a 31.5% stake in Thai Petrochemical Industry (TPI), the country's biggest corporate debtor, for around Baht20.2bn, PTT said in a statement to the Stock Exchange of Thailand (SET) on Thursday.
PTT intends to subscribe to about 6,142.5m shares of TPI at an indicative share price of Baht 3.30 per share.
The company expects to finalise the terms and conditions of the share purchase agreement by May, 2005, and pay for the shares no later than 4 November 2005 , in accordance with the deadline specified in TPI's rehabilitation plan. .
PTT has already conducted a due diligence on TPI's existing operations, business plan and projected financials to ensure that the investment satisfies the energy company's investment guidelines such as adherence to a 15% rate of return threshold.
`Through this investment, PTT intends to leverage TPI's existing business platform and further expand itself into a fully integrated petrochemical business,' the company said.
On 17 January this year, PTT had signed a Memorandum of Understanding (MoU) with the Ministry of Finance to purchase the TPI shares.
The Government Pension Fund, the state-linked fund manager Yayupak Fund, the Government Savings Bank and other government-linked organizations also signed the MoU to purchase another 30% ofTPI.
This means that TPI founder Prachai Leophairatana has likely failed in his attempt to buy back a controlling stake in the company, which collapsed under a mountain of debt following the 1997 devaluation of the Thai baht and had debts of around $2.95bn.
Under the MoU, the existing shareholders would be left with around 15% of the shares. This includes Prachai, who holds the title of chief executive officer but does not play an active part in the company's affairs.
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