Fitch affirms 'A+' rating for Titan's Indonesian unit TPN

21 July 2010 06:17  [Source: ICIS news]

SINGAPORE (ICIS news)--Fitch Ratings has affirmed on Wednesday its “A+” national long-term rating for PT Titan Petrokimia Nusantara (TPN), following announcement that its Malaysian parent will be acquired by South Korea’s Honam Petrochemical.

Malaysia’s Titan Chemicals has a 90.4% beneficial ownership in TPN. Honam, the flagship company of South Korean conglomerate Lotte Group, announced last Friday that it plans to fully acquire Titan for about $1.3bn.

“Fitch believes that Titan Chemicals' credit profile may be enhanced by the proposed acquisition given the operational and financial strengths of Honam,” said the credit ratings firm in a statement.

Fitch’s rating for TPN has a stable outlook, as it expects the Indonesian company to maintain its financial profile despite the anticipated downturn in the petrochemical industry in 2010-2011, it added.

“Nevertheless, the agency may consider a negative rating action in the event TPN has a sustained and weak operating performance, and/or if there is evidence of reduced integration with Titan Chemicals,” Fitch said.

TPN is one of the largest polyethylene producers in Indonesia with a total production capacity of 450,000 tonnes/year.

It has two 125,000 tonne/year high density polyethylene/linear low density PE swing plants and a third swing plant with 200,000 tonne/year capacity in Indonesia.

TPN's production volume hit 293,000 tonnes in 2009, recording full-year revenues of $380m (€296m) and an earnings before interests, taxes, depreciation, amortisation and rent (EBITDAR) of $51m, based on Fitch’s data.

($1 = €0.78)

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By: Pearl Bantillo
+65 6780 4359



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