Chandra Asri, Indonesia's largest integrated petrochemical company producing olefins and polyolefins, has selected Thai Oil Public Company Limited (Thaioil) as its chosen strategic investor.
As disclosed in a press statement, Chandra Asri said it selected Thaioil, the flagship refiner of PTT Public Company Limited (PTT), as its strategic investor after a robust selection process.
The two enterprises have signed definitive agreements to proceed with a capital increase in CAP via a Pre-Emptive Rights Issue, to be filed with the Financial Services Authority of Indonesia (OJK).
The investment in CAP will be made via Thaioil's designated subsidiary, which will act as the standby buyer to underwrite a successful transaction.
As disclosed in the press statement, CAP's major shareholders, Barito Pacific and SCG Chemicals Co., Ltd. (SCG Chemicals), fully support this corporate action to inject equity into CAP.
The net proceeds will be used for the development and construction of CAP's second world-scale integrated petrochemical complex by its subsidiary, PT Chandra Asri Perkasa (CAP 2), which will comprise, among others, a cracker unit, polymerized olefins, as well as related facilities and utilities.
This is in line with CAP's strategy to expand its production capacity and business scale to serve the needs of the Indonesian market.
The total estimated investment from Thaioil obtaining a 15 percent shareholding stake in CAP after the rights issue, and SCG Chemicals retaining approximately 30.57 percent of its shareholding stake in CAP, is up to US$1.3 billion.
The transaction is still subject to regulatory approvals, including from the OJK, and is expected to be completed no later than 30 September 2021. It will be one of the largest rights issue ever conducted on the Indonesia Stock Exchange (IDX).
Subject to a successful Final Investment Decision (FID) on CAP 2 targeted for 2022, Thaioil and SCG Chemicals may further collectively invest up to US$0.4 billion.
The methods of the subsequent investment will be determined by the parties at a later stage and remain subject to the approval of CAP shareholders and relevant governmental authorities in Indonesia.
The transaction provides opportunities for additional commercial partnership and growth. CAP has entered into a feedstock sales and purchase agreement with Thaioil for the supply of naphtha and liquefied petroleum gas to CAP and CAP 2, and a product distribution agreement.
Investment in CAP 2 is projected to be some US$ 5 billion. Construction is expected to take four to five years, creating 25,000 jobs over the period. It will double the Company's production capacity from the current 4.2 million tons per year to more than eight million tons per year.
This will help fulfill Indonesia's growing domestic demand, reduce dependency on imports, develop the country's local downstream petrochemical industry, support the government's vision for Industry 4.0, and create high-value long-term careers, CAP noted in the press statement.
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