Chandra Asri, Owned By Conglomerate Prajogo Pangestu, Receives Investment Of Up To US$1.7 Billion From Thaioil

Illustration (Photo: Doc. Antara)

JAKARTA - PT Chandra Asri Petrochemical Tbk (CAP) is reported to have signed a definitive agreement with Thai Oil Public Company Limited (Thaioil) regarding the commitment to increase capital through a limited public offering or rights issue of up to US$1.7 billion.

The plan is that investment in CAP will be made through a subsidiary appointed by Thaioil who will act as a standby buyer to ensure the success of this transaction.

To note, the main shareholders of the issuer codenamed TPIA, PT Barito Pacific Tbk, 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 the company's second integrated petrochemical complex.

President Director and CEO of Chandra Asri Erwin Ciputra said this corporate action will significantly improve the company's business development plans in line with the acceleration of taking FID in 2022.

"This is part of our core strategy to deliver transformational growth to serve Indonesia's needs, support customer expansion, and develop the domestic petrochemical industry," he said in an official statement, Friday, July 30.

Erwin added that what his company was doing was in line with President Joko Widodo's direction to promote independence and import substitution.

"We are pleased to have Thaioil, the largest refinery in Thailand as our growth partner, which enhances the security of raw material supply and strengthens the company's position as a leading petrochemical corporation in Indonesia," he said.

On the same occasion, President Director of PT Barito Pacific Tbk Agus Salim Pangestu revealed that Thaioil is one of the fundamental investors in Chandra Asri.

"Through the development of production facilities, we hope to be able to provide sustainable value for the Indonesian people and create even greater business opportunities in the future," he said.

Similarly, Thaioil Chief Executive Officer Wirat Uanarumit said that the existing cooperation is a strategic step to expand our value chain into the petrochemical business.

"I am pleased that we were able to complete this partnership process and assist CAP in its next stage of growth," he said.

According to Wirat, his party will supply naphtha to CAP from a clean fuel project (CFP) worth US$4.8 billion, which is scheduled to be completed in 2023. Through this effort, the safety of CAP's raw materials will be guaranteed.

"I believe this partnership will be successful and mutually beneficial for both CAP and Thaioil in developing a sustainable and profitable business in the future," he added.

Meanwhile, President of SCG Chemicals Tanawong Areeratchakul assessed that the synergy that has existed for a decade with CAP shows the company's commitment to Indonesia's growth.

"Our investment in reaffirms our commitment to Indonesia's long-term prosperity," he stressed.

For information, Thaioil's total investment estimate in the company owned by senior businessman Prajogo Pangestu will reach 15 percent of the share ownership in CAP after the rights issue.

Followed later, SCG Chemicals which retains about 30.57 percent of the stake in CAP, which amounted to 1.3 billion US dollars.

To note, this transaction still requires approval from the OJK which will be completed no later than September 30, 2021. It is claimed that this will be one of the largest rights issues ever conducted on the Indonesia Stock Exchange (IDX).

Meanwhile, the development and construction of the second CAP petrochemical complex or CAP2 is projected to cost US$5 billion. Construction is expected to take 4 to 5 years creating 25,000 jobs during this period.

Then, CAP2 is said to be able to double the company's production capacity from the current 4.2 million tons per year to more than 8 million tons per year.