Jakarta, CNBC Indonesia – An issuer belonging to tycoon Prajogo Pangestu, PT Chandra Asri Petrochemical Tbk (CAP), the largest integrated petrochemical company in Indonesia, has finally chosen Thai Oil Public Company Limited (Thaioil), the flagship refinery of PTT Public Company Limited (PTT) from Thailand as an investor strategically after going through a rigorous selection process.
Thus, CAP will get investment funds worth a total of US$ 1.7 billion or equivalent to Rp. 25 trillion (exchange rate of Rp. 14,500/US$).
This fund will be used for the development and construction of the second CAP integrated petrochemical complex on a global scale by its subsidiary, PT Chandra Asri Perkasa (CAP2) which will include cracker units, polymerized olefins and related facilities and utilities.
This is in line with CAP’s strategy to expand production capacity and business scale to serve the needs of the Indonesian market.
The investment mechanism is carried out through increasing capital in CAP through a Limited Public Offering (PUT) the issuance of new shares with Pre-emptive Rights (HMETD) alias rights issue which will be submitted to the Financial Services Authority (OJK).
Later, Thaioil will invest up to US$ 1.3 billion or equivalent to Rp 19 trillion and will acquire a 15% stake in CAP after the rights issue.
Meanwhile, SCG Chemicals Co. Ltd. (SCG Chemicals), as one of CAP’s major shareholders apart from PT Barito Pacific Tbk (BRPT) will retain approximately 30.57% of CAP’s share ownership.
Meanwhile, if there is a successful Final Investment Decision (FID) for CAP2 which is targeted for 2022, then Thaioil and SCG Chemicals can collectively invest up to US$ 0.4 billion or equivalent to Rp 5.8 trillion.
CAP’s management in its official statement stated that this transaction still requires approval from the applicable regulators, including from OJK and is expected to be completed no later than 30 September 2021.
If it is later realized, the company claims this will be one of the rights issue the largest ever by an issuer on the Indonesia Stock Exchange (IDX).
CAP and Thaioil have signed definitive agreements to proceed to the capital increase in CAP through PUT which will be submitted to OJK.
Investment in CAP will be made through a subsidiary appointed by Thaioil which will act as standby buyer to ensure the success of this transaction.
CAP’s main shareholders, Barito Pacific and SCG Chemicals, fully support this corporate action to inject equity into CAP.
The investment method is further determined by the parties at a later stage and is still subject to the approval of CAP’s shareholders and the relevant government authorities in the Republic of Indonesia.
“This is an extraordinary moment for Chandra Asri. The proceeds from the rights issue will significantly enhance our plans to develop our second petrochemical complex, as the company moves to accelerate FID acquisition by 2022,” said Erwin Ciputra, President Director and Chief Executive Officer. Officer Chandra Asri, in an official statement, Thursday (29/7).
He said this was part of CAP’s core strategy to deliver transformational growth to serve Indonesia’s needs, support customer expansion, and develop the domestic petrochemical industry.
“All of this is fully in line with the call of President Joko Widodo and the Government to promote self-reliance 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 our position as a leading petrochemical company and of choice. in Indonesia,” he said.
On the same occasion, Agus Salim Pangestu, President Director and Chief Executive Officer of Barito Pacific said that the company basically believes in growth through partnerships.
“I am pleased to have Thaioil as another fundamental investor in Chandra Asri, after going through a strong strategic investor selection and comprehensive process,” he said.
“We look forward to working together to realize CAP2 and create a beyond returns impact that builds sustainable value for people, businesses and communities inside and outside Indonesia,” he said.
“This partnership creates an extraordinary opportunity and environment to realize this vision, and we look forward to the next phase of this shared journey.
Wirat Uanarumit, President and Chief Executive Officer of Thaioil, said this partnership is an important step for Thaioil and a strategic step for the company to expand its business value chain into the petrochemical business.
“I am pleased that we are able to complete this partnership process with CAP, a major petrochemical producer in an attractive market like Indonesia, and to assist CAP in its next stage of growth with the development and construction of CAP2,” he said.
“This partnership will also synergize with the commercial collaboration between CAP and Thaioil where Thaioil can supply naphtha to CAP from the US$ 4.8 billion Clean Fuel Project (CFP) which is scheduled to be completed in 2023,” he said.
Thus, he said, the move would increase the safety of raw materials for CAP in the process.
“I believe this partnership will be successful and mutually beneficial for both CAP and Thaioil. We look forward to working with CAP to jointly develop a sustainable and profitable business in the future.”
Tanawong Areeratchakul, President of SCG Chemicals, also said that SCG Chemicals welcomes Thaioil as a strategic investor and new raw material partner.
“We fully support CAP and are delighted to co-invest in the development and construction of CAP2. SCG Chemicals’ decade-long partnership and successful collaboration with CAP demonstrates our commitment to Indonesia’s growth.”
“Our investment in CAP2 reaffirms our commitment to Indonesia’s long-term prosperity. We look forward to working with CAP, Barito and Thaioil to complete CAP2 successfully,” he said.
CAP’s management said this transaction provides opportunities for partnerships and additional commercial growth.
CAP has entered into raw material sales and purchase agreements with Thaioil for the supply of naphtha and LPG to CAP and CAP2, as well as product distribution agreements, all of which are subject to long-term terms.
Meanwhile, investment management in CAP2 is projected to be around US$ 5 billion, and construction is estimated to take 4 to 5 years creating 25,000 jobs during this period.
In addition, this will double CAP’s production capacity from the current 4.2 million tons per year to more than 8 million tons per year.
“This will help meet Indonesia’s growing domestic demand, reduce dependence on imports, develop the local downstream petrochemical industry, support the government’s vision for Industry 4.0, and create a long-term, high-value career,” wrote CAP’s management.
For your information, Thaioil is refinery and the largest supplier of petroleum products in Thailand. The company was founded in 1961 and is recognized as one of the refinery most efficient in Asia Pacific.
SCG Chemicals is one of the largest integrated petrochemical companies in Thailand and a major industry leader in Thailand, offering a complete range of petrochemical products from upstream production of olefins to downstream production of three main plastic resins: polyethylene, polypropylene and polyvinyl chloride.
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