Thai chemical company PTTGC rules out raising capital to fund 4 billion euro Allnex purchase

Bangkok

THAI chemical company PTT Global Chemical (PTTGC) on Tuesday said it would not need to raise capital to finance a four billion euro (S$6.4 billion) acquisition of German coating resins maker Allnex.

Its shares rose 6 per cent on Tuesday, recovering losses from a day ago amid investor worries about a new share issuance.

"We don't have to increase capital as some people expected," chief executive Kongkrapan Intarajang said in an online briefing. "We have enough cash, a capital raise is far away."

The acquisition will be funded by cash and loans, its top finance executive Pattaralada Sa-Ngasang said. The company has cash on hand of about 123 billion baht (S$5.1 billion), said Ms Pattaralada. It also had a letter of credit from its parent firm, state-owned PTT Pcl, for 32 billion baht and a two-year loan agreement for 74 billion baht with PTT.

"Banks have also proposed loans of up to nearly US$1 billion," she said.

The combined sources of funds amounted to more than 155 billion baht, PTTGC said, above the 148 billion baht needed for the deal.

The deal is expected to conclude by the end of the year pending regulatory approval, and would have no impact the company's dividend payment ability, it said.

Allnex, whose products are used in the industrial metal, automotive and packaging industries, has annual revenue of two billion euros and employs 4,000 people worldwide.

The acquisition would bring PTTGC closer to its goal of expanding the contribution from performance and green chemicals to a quarter of its revenue by 2030 from 10 per cent currently, Mr Kongkrapan said. REUTERS