No. 520/14/225
June 1, 2006
Subject: Notification of the signing of the Share Acquisition Agreement, the Shareholders
Agreement and other related agreements for the joint investment in HMC Polymers
Company Limited
To:
President
The Stock Exchange of Thailand
PTT Public Company Limited (PTT) is pleased to inform that, on June 1, 2006,
PTT, as according to the approval by PTT’s board of directors, has signed the Share Acquisition
Agreement, Shareholders Agreement and other related agreements for the joint investment in
HMC Polymers Company Limited (HMC), in which PTT will invest in 40% of total shares of
HMC with total amount of approximately US$ 250 million by purchasing both the newly issued
and existing HMC shares, transaction of which is scheduled to be completed by August, 2006.
After such investment, PTT will become the largest major shareholder of HMC with certain
involvement in the company’s management. The effectiveness of the agreements is subject to
certain conditions precedent.
HMC is an established producer of polypropylene (PP) products with current
capacity of 420,000 tons per year, whereby its business direction emphasizes on producing
specialty grade of PP products. HMC also holds shares in PTT Chemicals Public Company
Limited and Rayong Olefins Company Limited with proportion of 2.83% and 14.27%
respectively. Current major shareholders of HMC comprise of Basell Thailand Holdings B.V.,
Bangkok Bank Public Company Limited and Huakee Group.
After the investment by PTT, PTT plans to support HMC to develop the Propane
Dehydrogenation and Polypropylene project (PDH/PP project) to produce PP in addition to
HMC’s existing operation, details of which are as follows;
PDH production capacity 310,000 tons per year
PP production capacity
300,000 tons per year
Feedstock
Propane 388,000 tons per year from PTT’s Gas Separation plants
Commercial operation
Second quarter of 2009
After 300,000 tons per year expansion of PP product, HMC will become one of the leaders in
regional PP producers. PDH/PP project will also emphasize on producing Specialty Grade PP,
the properties of which are distinctive from and with higher price than of Commodity Grade PP,
enabling PTT to avoid fierce competition in commodity market. Moreover, PP product is
-2different from other petrochemical products of PTT group, thus creating diversification of
products portfolio.
Expected benefits of PTT from investment in HMC are as follows;
: Consistent with PTT’s petrochemical business strategy to expand it’s
petrochemical business to further downstream in order to gain benefit from being fully
integrated.
: Enable PTT to immediately enter into downstream petrochemical.
: Add value to the propane produced by PTT’s Gas Separation Plants.
: Be able to realize earnings from existing business of HMC during construction
period of the PDH/PP project.
: Benefit from the synergy between the existing and new PP production, such as a
more simple production planning resulted from the additional production lines, which will
eventually reduce operating and marketing cost while increase the production of specialty grade
PP.
: Enable PTT to gain benefit on technical side, operation and marketing from the
expertise and experience of HMC, including the technology support, so called Spherizone, from
Basell, who is also one of the shareholders of HMC.
This transaction is not a connected transaction and the size of the transaction is
exempted from being disclosed under the rule, procedures and disclosure of information
concerning the acquisition and disposition of assets of listed companies, but this report is in
accordance with the disclosure of investment in a joint venture company with a proportion of
10% or more of its paid up capital.
Please be informed accordingly.
Yours sincerely,
Prasert Bunsumpun
President
Capital Market and Investor Relations Department
Tel. 02-537-2792
Fax. 02-537-2791