Company to decide on ammonia project in FY 2012
Petronas Chemicals Group Bhd (PCG) may invest up to US$1bil in a greenfield ammonia and urea production facility in Sabah to enhance its profile as a key ammonia and urea producer in South-East Asia, said its top executive.
PCG chairman Datuk Wan Zulkiflee Wan Ariffin said the project was currently at a pre-feasibility study phase and PCG would make a final investment decision in financial year 2012.
“We have not sanctioned the project yet and hope to do it by the next financial year, with a targeted commissioning date in 2015/2016. The investment for the facility will be between US$900mil and US$1bil,” he told reporters after PCG’s prospectus launch yesterday.
Proceeds from the initial public offering may be used for this facility as well as a greenfield project to develop an integrated refinery and petrochemicals complex in Peninsular Malaysia.
PCG could potentially raise gross proceeds of RM3.54bil from the issuance of 700 million new shares at a retail price of RM5.05. From the RM3.54bil, 63.3% would be used to expand PCG’s business and synergistic growth acquisitions within five years.
The company would issue a total of 2.48 billion shares under its initial public offering (IPO), of which 1.78 billion would be existing shares and 700 million would be new.
The retail price is RM5.05 while the institutional price would be determined through a bookbuilding exercise, which is ongoing and will end on Nov 12.
The gross proceeds of RM8.99bil from the existing 1.78 billion shares would go back into Petroliam Nasional Bhd’s (Petronas) coffers and be utilised by the group for capital expenditure, said Petronas executive vice-president for finance Datuk George Ratilal.
PCG’s two cornerstone investors, the Employees Provident Fund and Kumpulan Wang Persaraan, would take up 445 million shares, or 18%, of the 2.48 billion shares offered under its IPO.
Wan Zulkiflee said the company was on the start of an up-cycle that would continue until 2015 and that PCG was more focus on captive markets and pushing towards differentiated and specialised products.
PCG has a total of 22 companies producing a wide range of petrochemical products such as olefins, polymers, fertilisers and methanol.
The petrochemical industry has generated some US$3 trillion in revenue globally last year and is expected to grow at an average of 4.9% from 2010 to 2015.
Deputy Prime Minister Tan Sri Muhyiddin Yassin said in a speech at the prospectus launch yesterday that the Petronas group could collectively account for over 10% of Bursa Malaysia’s total market capitalisation and over 16% of the FTSE Bursa Malaysia KL Composite Index.
“The listing (by PCG) is expected to be one of the largest ever undertaken in South-East Asia and will contribute significantly to the expansion of Malaysia’s capital markets by increasing the liquidity needed to fuel economic growth,” he said.
Muhyiddin said that government-linked investment companies were to divest their shareholdings in major companies listed on the stock exchange as a way to increase liquidity and trading velocity in the market.
