THE WALL STREET JOURNAL: Thai PTT To Buy 64% Stake In Rayong Refinery (ShellNews.net)

DOW JONES NEWSWIRES

August 20, 2004 1:25 a.m.

PTT said the move to increase its stake in Rayong Refinery is to support the latter's debt and capital restructuring plan.

The move is subject to shareholders' approval at a Sept. 24 meeting.

"As part of Shell 's ongoing program to upgrade its business portfolio, Shell has decided to divest its shares to PTT to allow PTT to achieve a successful financial restructuring for the company and to help secure Rayong Refinery's long-term future," Shell said in a statement Friday.

Due to rising demand for petroleum products in domestic and regional markets, Rayong Refinery's performance and enterprise value are expected to improve in the future, PTT said.

Rayong Refinery has been facing serious financial difficulties since the 1997-98 Asian financial crisis, as its refinery started operations a year before the crisis occurred.

The debt and capital restructuring plan includes a debt buyback at a 15% discount, that will reduce Rayong Refinery's debt to $1.14 billion from THB$1.34 billion.

PTT will provide additional financial support worth up to $250 million, in the form of subordinated debt or equity, to the company.

The company will also obtain long-term loans worth $650 million to replace the existing loan.

However, PTT said its unit Thai Oil PCL will remain as its core refinery, and it will seek to sell its stake in Rayong Refinery, via a share sale to strategic partners or initial public offer, at an appropriate time in the future.

-By Supunnabul Suwannakij, Dow Jones Newswires; 662-266-0744; supunnabul.suwannakij@dowjones.com

-Edited by Sharon Vong