Fitch keeps IOI Corp’s rating at A- after acquisition

11 December 2006 04:47  [Source: ICIS news]

SINGAPORE (ICIS news)--Fitch Ratings has kept Malaysian crude palm oil (CPO) producer IOI Corp’s rating at A- with stable outlook due to high CPO prices following its plans to buy oleochemical units and palm oil refineries, it said on Monday.

IOI Corp would become the largest vegetable oil based fatty acid producer globally after the acquisition and it remained the most profitable publicly listed plantation operator in Malaysia on a per hectare basis, Fitch said in a statement.

IOI Corp was buying India's Aditya Birla Group's oleochemical and palm oil refinery operations in Malaysia for ringgit (M$) 423m ($117.5m), Fitch said.

The palm oil refinery, fatty acid and soap noodle plants have total capacities of 1m tonnes/year, 350,000 tonnes/year and 120,000 tonnes/year respectively.

IOI was expected to use its cash and liquid funds balances at M$1,1m as at end September 2006 to fund the acquisition, Fitch said. The company was also raising $500m from an exchangeable bond issue which should replenish its cash balances, it added.

These would add to its debt, but its ability to service its debt was likely to remain strong as its operating cash flow would increase from high CPO prices, Fitch said.

The company was also likely to expand its oleochemicals business and these expansions complement the company's core strength of being a leader in the palm oil plantation industry in terms of operating efficiency and cost management, it added.

IOI Corp is an integrated player in the palm oil industry. It owns 158,646 hectares of plantation land in Malaysia and produces oleochemicals, specialty oils and fats. IOI Corp is also involved in property development and investment in Malaysia.

($1=M$3.6)

By: Florence Tan
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly