Reports to the Stock Exchange
Acquisition of 100% Partnership Interest in Ethylene Oxide/Ethylene Glycol Facility in USA
Acquisition and disposition of assets
Ref.No.IVL001/02/2012
7 February 2012
President
The Stock Exchange of Thailand
Subject: Acquisition of 100% Partnership Interest in Ethylene Oxide/Ethylene
Glycol Facility in USA
Attachment: Information Memorandum Relating to the Acquisition of 100%
partnership interest of Old World Industries I, Ltd. and Old World
Transportation, Ltd. in USA (Schedule I)
The Board of Directors of Indorama Ventures Public Company Limited ("IVL")
approved the acquisition of 100% partnership interest in Old World Industries I
Ltd., and Old World Transportation Ltd., (collectively called "Old World"),
located in Clear Lake, Texas, USA.
Old World, is the largest single EO/EG production facility in the U.S. with
Crude EO capacity of 435,000 tons per annum. Mono Ethylene Glycol (MEG) is one
of the key components, together with Purified Terephthalic Acid (PTA), in the
manufacture of Polyethylene Terephthalate (PET) and Polyester Fibers and Yarns,
both downstream products of IVL.
IVL has signed a definitive Purchase Agreement on 6 February 2012 with the
seller in USA and the Company expects the closing of the transaction within
first quarter of 2012 subject to the applicable regulatory approvals.
This transaction size is 17.73 percent under the criteria of the "Value of
Consideration" compared with the total assets of the Company.
Therefore, the value of the above acquisition, calculated in accordance with the
regulation of the Capital Market Supervisory Board and the Stock Exchange of
Thailand, is more than 15 percent but lower than 50 percent as prescribed by the
regulation of the Stock Exchange of Thailand Re: Disclosure of Information and
Other Acts of Listed Companies Concerning the Acquisition and Disposition of
Assets, 2004 (as amended). Details set out in Schedule 1 as attached.
Please be informed accordingly.
Yours faithfully,
(Mr. Souvik Roy Chowdhury)
Company Secretary
-Translation-
Information Memorandum Relating to the Acquisition of Partnership Interest
by
Indorama Ventures Public Company Limited
The Board of Directors of Indorama Ventures Public Company Limited (the
"Company") has approved the signing of a definitive Purchase Agreement to
acquire 100% of partnership interests in Old World Industries I, Ltd. and Old
World Transportation, Ltd. (collectively, "Old World") from Old World
Industries, LLC and Old World Management, Inc. (the "Seller"). The details of
this transaction are as follows:
1. The date of the transaction:
The Company and the Seller entered into a Purchase Agreement on 6 February 2012.
The Company expects the closing of the transaction within the first quarter of
2012 subject to the applicable regulatory approvals.
2. The parties involved and their relationship with the Company:
Buyer: The Company and/or its subsidiaries/affiliates.
Seller: Old World Industries, LLC and Old World Management, Inc.
Relationship between the parties:
None of the parties are considered to be a related person and are not connected
persons under the Notification of the Capital Market Supervisory Board No. Tor
Chor. 21/2008, Re: Rules on Connected Transactions dated August 31, 2008 and the
Notification of the Board of Governors of the Stock Exchange of Thailand Re:
Disclosure of Information and Other Acts of Listed Companies concerning
Connected Transactions, B.E. 2546 (2003) dated November 19, 2003.
3. The general characteristics of the transaction:
The Company through its direct/indirect subsidiaries, will acquire 100% of
partnership interests in Old World Industries I, Ltd. and Old World
Transportation, Ltd. from Old World Industries, LLC and Old World Management,
Inc.
According to the Notification of the Capital Market Supervisory Board, No. Tor
Chor. 20/2551 Re: Rules on Entering into Material Transactions Deemed as an
Acquisition or Disposal of Assets dated August 31, 2008 and the Notification of
the Stock Exchange of Thailand Re: the Disclosure of Information Concerning the
Acquisition and Disposition of the Assets of Listed Companies B.E 2547 (2004)
dated October 29, 2004, the transaction falls under the "Value of Consideration"
criteria" and the size is 17.73 percent of the total assets of the Company.
4. The details of acquisition :
General Characteristics of the Business:
? Old World
Old World is in the business of production and sales of ethylene oxide "EO" and
derivative products from ethylene oxide: purified ethylene oxide "PEO",
monoethylene glycol "MEG", diethylene glycol "DEG", and triethylene glycol
"TEG". The plant is located within a large petrochemical hub in Clear Lake,
Texas, USA. The facility is strategically located within close proximity of raw
materials and utilities. Further, the plant is connected with an efficient
network of logistics including pipelines, deepwater terminal, railcars and
trucks.
The main raw material required for production is ethylene which is available
from merchant sellers through multiple pipelines connected to the plant
facility. The plant employs technology from Shell. The production capability
provides flexibility to service both EO and glycol markets. Old world has a
large, diversified and blue chip customer base of leading specialty and
industrial customers and consumer goods manufacturers.
The products manufactured and processed are;
EO is in the form of gas and manufactured by reacting ethylene with pure oxygen.
EO is an intermediate product which can further be processed into either EO
derivatives and glycols. EO is either purified to make Purified EO (PEO),
ethoxylates, ethanolamines and other intermediates or is hydrated to make
monoethylene glycol and other Glycols. EO is primarily used for manufacture of
ethylene glycols.
PEO is made from the purification of EO. The PEO derivatives are used to
manufacture various products such as soaps, detergents, brake fluids, weed
killer and urethane foam.
MEG is made from hydration of EO. MEG is mainly used to manufacture polyester
fibers and PET resins. The demand for polyester fibers and PET resins has been
growing for textiles, home furnishings, industrial products, hygiene products
and packaging material for food & beverages. Also, MEG is often used in
applications that require a solution to have extremely low freezing point like
automotive anti-freeze and coolants.
DEG is a by-product made together with MEG through processing of EO. DEG has
large applications and used to manufacture polyester polyols, unsaturated
polyester resins, buffet heaters, morpholine production, paints & coatings,
plasticizers, liquid laundry detergent, cement grinding and intermediate for
polyethylene glycol.
TEG is a by product made together with MEG through processing of EO. TEG main
application is for natural gas dehydration. The increase in shale gas and oil
exploration has resulted in high demand growth for TEG. The other applications
are air sterilizers, resin for windshield plate glass and intermediate for
polyethylene glycol.
Alcohol Ethoxylates is a product made from PEO mixed with alcohol. Old World
through a third-party tolling arrangement converts PEO into Alcohol Ethoxylates
to serve its customer base of ethoxylates.
The product capacity's are as follows;
Product Capacity
(million pounds per annum) *Capacity
(tons per annum)
**EO 960 435,000
Purified EO 450 204,000
MEG 790 358,000
DEG 140 64,000
TEG 14 6,400
Total 1,394 632,400
*2,204.1 pounds is equivalent to 1 ton
**EO is an intermediate product which is further processed into Purified EO,
MEG, DEG and TEG
Partners' Capital:
As at 31.12.2010
Unit: US$ (in thousand)
Old World Industries I, Ltd 228,541
Old World Transportation, Ltd. 1,714
Partners:
Limited Partner
(% Interest) General Partner
(% Interest)
Old World Industries I, Ltd Old World Industries, LLC (99.9%) Old World
Management Inc (0.1%)
Old World Transportation, Ltd. Old World Industries, LLC (99.9%) Old World
Management Inc (0.1%)
Financial Highlights:
Unit: US$ (in thousand)
ITEMS 31/12/2010
(Audited)
Revenue 514,389
EBITDA after normalization 102,227
Net Profit (Loss) 62,399
Total Assets 179,414
Total Liabilities 184,523
Partner (deficit)/ capital - net of partners current account (5,109)
Note: Estimated 2011 revenue is USD 567 million and EBITDA after normalization
of USD 158 million as per management information
Year 2010 financials are from Audited Combined Financial Statement of
Old World Industries
I, Ltd. and Old World Transportation, Ltd.
5. The total acquisition value:
The total acquisition value is US$ 795 million, equivalent to approximately Baht
24,645 million (exchange rate US$1.00: Baht 31.00) which has been based on the
enterprise value of Old World. The consideration value shall be paid by cash.
6. Criteria used to determine the value of assets acquired:
The purchase price was arrived at after arms-length negotiation between the
Company and Seller. The Company took into consideration the fundamental
intrinsic value of the assets and business based on the historical and potential
earnings and cash flow of the business, discounted cash flow analysis,
precedent transactions analysis, comparable companies analysis, replacement
value, among other financial benchmark, and the potential value creation of a
combination through synergies.
7. Benefits expected to be generated
The acquisition of Old World is a strategic move by IVL to further integrate
within the polyester value chain into its key raw material MEG. MEG is a raw
material in the production of PET polymers and polyester fibers and yarns.
Further, it provides platform for growth in new products with higher margins,
established production facility, customer base, supplier network and an
experienced management team. The acquisition is expected to be accretive to
earnings of IVL and strengthen the business for long term sustainability.
- Positive global outlook including in North America for EO/MEG for growth in
demand, high utilization rate and margins
- North America advantaged feedstock source from natural gas and shale gas
- North America has availability of merchant supply of ethylene from multiple
suppliers through a network of pipelines
- Old World is one of the largest single site EO/MEG operations in North America
- Product flexibility and market leader in respective productive categories and
known for its superior quality products
- Strategic location at Clear Lake site, part of a larger Celanese site.
Location is one of the best for this type of industry with advantageous raw
material and utilities supply
- Efficient logistics with connectivity through network of pipelines, vicinity
of deep water terminals, rail cars and roads
- Celanese, an experienced petrochemical group, operating and maintaining the
production facilities since 1999 under a 99 year lease. The site has one of the
best safety track records with only one OSHA reportable incidence in nearly 12
years of operations. EO manufacturing is a specialized business and nature of
the product is hazardous.
- Synergies and operational efficiencies with IVL's existing operations of PET
polymers and polyester fibers and yarns of around 1.6 million tons in North
America
8. Sources of Funds
The sources of funds are internal cash and loans from banks or financial
institutions.
9. Opinion of the Board of Directors concerning the decision to enter into a
transaction
The Board of Directors unanimously approved to proceed with the transaction and
considered that it is a reasonable investment and beneficial to the company
business as for integration within the polyester value chain which will lead to
increase in revenues, margins and earnings of the Company.
10. Opinion of the Audit Committee and/or the Director of the Company which is
different from the opinion of the Board of Directors in Clause 9
- None -
11. Opinion of an independent expert
- None -
12. Financial projections in the present year
- None -
13. Pending material lawsuits or claims relating to the business acquisition
- None -
14. Interests or connected transactions between the Company and directors,
management and shareholders directly or indirectly holding shares amounting to
10 percent to more
- None -
The Board of Directors hereby reviewed all the information contained within this
Information Memorandum with careful consideration and verified that the
information is complete, accurate, not misleading in any way, or lacking in
material information disclosed herein.
Indorama Ventures Public Company Limited
(Mrs. Suchitra Lohia) (Mr. Sashi Prakash Khaitan)
Authorized director Authorized director
Company seal affixed
______________________________________________________________________
This announcement was prepared and disseminated by listed company or issuer
through the electronic system which is provided for the purpose of dissemination
of the information and related documents of listed company or issuer to the
Stock Exchange of Thailand only. The Stock Exchange of Thailand has no
responsibility for the correctness and completeness of any statements, figures,
reports or opinions contained in this announcement, and has no liability for any
losses and damages in any cases. In case you have any inquiries or
clarification regarding this announcement, please directly contact listed
company or issuer who made this announcement.
Ref.No.IVL001/02/2012
7 February 2012
President
The Stock Exchange of Thailand
Subject: Acquisition of 100% Partnership Interest in Ethylene Oxide/Ethylene
Glycol Facility in USA
Attachment: Information Memorandum Relating to the Acquisition of 100%
partnership interest of Old World Industries I, Ltd. and Old World
Transportation, Ltd. in USA (Schedule I)
The Board of Directors of Indorama Ventures Public Company Limited ("IVL")
approved the acquisition of 100% partnership interest in Old World Industries I
Ltd., and Old World Transportation Ltd., (collectively called "Old World"),
located in Clear Lake, Texas, USA.
Old World, is the largest single EO/EG production facility in the U.S. with
Crude EO capacity of 435,000 tons per annum. Mono Ethylene Glycol (MEG) is one
of the key components, together with Purified Terephthalic Acid (PTA), in the
manufacture of Polyethylene Terephthalate (PET) and Polyester Fibers and Yarns,
both downstream products of IVL.
IVL has signed a definitive Purchase Agreement on 6 February 2012 with the
seller in USA and the Company expects the closing of the transaction within
first quarter of 2012 subject to the applicable regulatory approvals.
This transaction size is 17.73 percent under the criteria of the "Value of
Consideration" compared with the total assets of the Company.
Therefore, the value of the above acquisition, calculated in accordance with the
regulation of the Capital Market Supervisory Board and the Stock Exchange of
Thailand, is more than 15 percent but lower than 50 percent as prescribed by the
regulation of the Stock Exchange of Thailand Re: Disclosure of Information and
Other Acts of Listed Companies Concerning the Acquisition and Disposition of
Assets, 2004 (as amended). Details set out in Schedule 1 as attached.
Please be informed accordingly.
Yours faithfully,
(Mr. Souvik Roy Chowdhury)
Company Secretary
-Translation-
Information Memorandum Relating to the Acquisition of Partnership Interest
by
Indorama Ventures Public Company Limited
The Board of Directors of Indorama Ventures Public Company Limited (the
"Company") has approved the signing of a definitive Purchase Agreement to
acquire 100% of partnership interests in Old World Industries I, Ltd. and Old
World Transportation, Ltd. (collectively, "Old World") from Old World
Industries, LLC and Old World Management, Inc. (the "Seller"). The details of
this transaction are as follows:
1. The date of the transaction:
The Company and the Seller entered into a Purchase Agreement on 6 February 2012.
The Company expects the closing of the transaction within the first quarter of
2012 subject to the applicable regulatory approvals.
2. The parties involved and their relationship with the Company:
Buyer: The Company and/or its subsidiaries/affiliates.
Seller: Old World Industries, LLC and Old World Management, Inc.
Relationship between the parties:
None of the parties are considered to be a related person and are not connected
persons under the Notification of the Capital Market Supervisory Board No. Tor
Chor. 21/2008, Re: Rules on Connected Transactions dated August 31, 2008 and the
Notification of the Board of Governors of the Stock Exchange of Thailand Re:
Disclosure of Information and Other Acts of Listed Companies concerning
Connected Transactions, B.E. 2546 (2003) dated November 19, 2003.
3. The general characteristics of the transaction:
The Company through its direct/indirect subsidiaries, will acquire 100% of
partnership interests in Old World Industries I, Ltd. and Old World
Transportation, Ltd. from Old World Industries, LLC and Old World Management,
Inc.
According to the Notification of the Capital Market Supervisory Board, No. Tor
Chor. 20/2551 Re: Rules on Entering into Material Transactions Deemed as an
Acquisition or Disposal of Assets dated August 31, 2008 and the Notification of
the Stock Exchange of Thailand Re: the Disclosure of Information Concerning the
Acquisition and Disposition of the Assets of Listed Companies B.E 2547 (2004)
dated October 29, 2004, the transaction falls under the "Value of Consideration"
criteria" and the size is 17.73 percent of the total assets of the Company.
4. The details of acquisition :
General Characteristics of the Business:
? Old World
Old World is in the business of production and sales of ethylene oxide "EO" and
derivative products from ethylene oxide: purified ethylene oxide "PEO",
monoethylene glycol "MEG", diethylene glycol "DEG", and triethylene glycol
"TEG". The plant is located within a large petrochemical hub in Clear Lake,
Texas, USA. The facility is strategically located within close proximity of raw
materials and utilities. Further, the plant is connected with an efficient
network of logistics including pipelines, deepwater terminal, railcars and
trucks.
The main raw material required for production is ethylene which is available
from merchant sellers through multiple pipelines connected to the plant
facility. The plant employs technology from Shell. The production capability
provides flexibility to service both EO and glycol markets. Old world has a
large, diversified and blue chip customer base of leading specialty and
industrial customers and consumer goods manufacturers.
The products manufactured and processed are;
EO is in the form of gas and manufactured by reacting ethylene with pure oxygen.
EO is an intermediate product which can further be processed into either EO
derivatives and glycols. EO is either purified to make Purified EO (PEO),
ethoxylates, ethanolamines and other intermediates or is hydrated to make
monoethylene glycol and other Glycols. EO is primarily used for manufacture of
ethylene glycols.
PEO is made from the purification of EO. The PEO derivatives are used to
manufacture various products such as soaps, detergents, brake fluids, weed
killer and urethane foam.
MEG is made from hydration of EO. MEG is mainly used to manufacture polyester
fibers and PET resins. The demand for polyester fibers and PET resins has been
growing for textiles, home furnishings, industrial products, hygiene products
and packaging material for food & beverages. Also, MEG is often used in
applications that require a solution to have extremely low freezing point like
automotive anti-freeze and coolants.
DEG is a by-product made together with MEG through processing of EO. DEG has
large applications and used to manufacture polyester polyols, unsaturated
polyester resins, buffet heaters, morpholine production, paints & coatings,
plasticizers, liquid laundry detergent, cement grinding and intermediate for
polyethylene glycol.
TEG is a by product made together with MEG through processing of EO. TEG main
application is for natural gas dehydration. The increase in shale gas and oil
exploration has resulted in high demand growth for TEG. The other applications
are air sterilizers, resin for windshield plate glass and intermediate for
polyethylene glycol.
Alcohol Ethoxylates is a product made from PEO mixed with alcohol. Old World
through a third-party tolling arrangement converts PEO into Alcohol Ethoxylates
to serve its customer base of ethoxylates.
The product capacity's are as follows;
Product Capacity
(million pounds per annum) *Capacity
(tons per annum)
**EO 960 435,000
Purified EO 450 204,000
MEG 790 358,000
DEG 140 64,000
TEG 14 6,400
Total 1,394 632,400
*2,204.1 pounds is equivalent to 1 ton
**EO is an intermediate product which is further processed into Purified EO,
MEG, DEG and TEG
Partners' Capital:
As at 31.12.2010
Unit: US$ (in thousand)
Old World Industries I, Ltd 228,541
Old World Transportation, Ltd. 1,714
Partners:
Limited Partner
(% Interest) General Partner
(% Interest)
Old World Industries I, Ltd Old World Industries, LLC (99.9%) Old World
Management Inc (0.1%)
Old World Transportation, Ltd. Old World Industries, LLC (99.9%) Old World
Management Inc (0.1%)
Financial Highlights:
Unit: US$ (in thousand)
ITEMS 31/12/2010
(Audited)
Revenue 514,389
EBITDA after normalization 102,227
Net Profit (Loss) 62,399
Total Assets 179,414
Total Liabilities 184,523
Partner (deficit)/ capital - net of partners current account (5,109)
Note: Estimated 2011 revenue is USD 567 million and EBITDA after normalization
of USD 158 million as per management information
Year 2010 financials are from Audited Combined Financial Statement of
Old World Industries
I, Ltd. and Old World Transportation, Ltd.
5. The total acquisition value:
The total acquisition value is US$ 795 million, equivalent to approximately Baht
24,645 million (exchange rate US$1.00: Baht 31.00) which has been based on the
enterprise value of Old World. The consideration value shall be paid by cash.
6. Criteria used to determine the value of assets acquired:
The purchase price was arrived at after arms-length negotiation between the
Company and Seller. The Company took into consideration the fundamental
intrinsic value of the assets and business based on the historical and potential
earnings and cash flow of the business, discounted cash flow analysis,
precedent transactions analysis, comparable companies analysis, replacement
value, among other financial benchmark, and the potential value creation of a
combination through synergies.
7. Benefits expected to be generated
The acquisition of Old World is a strategic move by IVL to further integrate
within the polyester value chain into its key raw material MEG. MEG is a raw
material in the production of PET polymers and polyester fibers and yarns.
Further, it provides platform for growth in new products with higher margins,
established production facility, customer base, supplier network and an
experienced management team. The acquisition is expected to be accretive to
earnings of IVL and strengthen the business for long term sustainability.
- Positive global outlook including in North America for EO/MEG for growth in
demand, high utilization rate and margins
- North America advantaged feedstock source from natural gas and shale gas
- North America has availability of merchant supply of ethylene from multiple
suppliers through a network of pipelines
- Old World is one of the largest single site EO/MEG operations in North America
- Product flexibility and market leader in respective productive categories and
known for its superior quality products
- Strategic location at Clear Lake site, part of a larger Celanese site.
Location is one of the best for this type of industry with advantageous raw
material and utilities supply
- Efficient logistics with connectivity through network of pipelines, vicinity
of deep water terminals, rail cars and roads
- Celanese, an experienced petrochemical group, operating and maintaining the
production facilities since 1999 under a 99 year lease. The site has one of the
best safety track records with only one OSHA reportable incidence in nearly 12
years of operations. EO manufacturing is a specialized business and nature of
the product is hazardous.
- Synergies and operational efficiencies with IVL's existing operations of PET
polymers and polyester fibers and yarns of around 1.6 million tons in North
America
8. Sources of Funds
The sources of funds are internal cash and loans from banks or financial
institutions.
9. Opinion of the Board of Directors concerning the decision to enter into a
transaction
The Board of Directors unanimously approved to proceed with the transaction and
considered that it is a reasonable investment and beneficial to the company
business as for integration within the polyester value chain which will lead to
increase in revenues, margins and earnings of the Company.
10. Opinion of the Audit Committee and/or the Director of the Company which is
different from the opinion of the Board of Directors in Clause 9
- None -
11. Opinion of an independent expert
- None -
12. Financial projections in the present year
- None -
13. Pending material lawsuits or claims relating to the business acquisition
- None -
14. Interests or connected transactions between the Company and directors,
management and shareholders directly or indirectly holding shares amounting to
10 percent to more
- None -
The Board of Directors hereby reviewed all the information contained within this
Information Memorandum with careful consideration and verified that the
information is complete, accurate, not misleading in any way, or lacking in
material information disclosed herein.
Indorama Ventures Public Company Limited
(Mrs. Suchitra Lohia) (Mr. Sashi Prakash Khaitan)
Authorized director Authorized director
Company seal affixed
______________________________________________________________________
This announcement was prepared and disseminated by listed company or issuer
through the electronic system which is provided for the purpose of dissemination
of the information and related documents of listed company or issuer to the
Stock Exchange of Thailand only. The Stock Exchange of Thailand has no
responsibility for the correctness and completeness of any statements, figures,
reports or opinions contained in this announcement, and has no liability for any
losses and damages in any cases. In case you have any inquiries or
clarification regarding this announcement, please directly contact listed
company or issuer who made this announcement.