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NEWS UPDATES 21 July 2010

Mergers delayed for PTT

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The consolidation plan for PTT's oil-refining and petrochemical units faces further delays as a number of legal issues need serious discussion, according to Prasert Bunsumpun, the president and CEO of the country's largest oil company.

The PTT Group has been planning for more than a year to merge its refining and petrochemical units in order to create synergy and improve cost efficiency, according to the Bangkok Post.

The first phase would focus on PTT Aromatics and Refinery, the country's largest integrated aromatics refinery, which is 49 percent owned by PTT, and IRPC, 36 percent owned by PTT. The merger would create Asia's eighth-largest oil refiner.

The plan was postponed from the end of last year to early next year and now may be postponed further.

However, PTTAR president Chainoi Puenkosoom had hoped to present a proposal to the PTT board this week, but Mr Prasert said yesterday the plan would not be on the agenda of the directors' meeting.

The biggest concern relates to outstanding lawsuits lodged by Prachai Leophairatana, the founder of Thai Petrochemical Industry, which PTT acquired in a debt restructuring and renamed IRPC.

"It is impossible that the plan will be introduced as previously scheduled by the first quarter of next year," said Mr Prasert. "There are a lot of issues that require more in-depth studies and serious discussions."

Outstanding lawsuits against IRPC's former shareholder, as well as global energy and chemical business trends were among the issues, he added.

The board of PTTAR itself was still studying the issues, he said.

One of the concerns relates to a recent investigation by the national anti-graft agency into the government's handling of the business rehabilitation plan of TPI before it became IRPC.

Last week, the National Anti-Corruption Commission ruled that former prime minister Thaksin Shinawatra was wrong to endorse the Finance Ministry as an administrator for TPI's rehabilitation plan in 2003.

TPI was Thailand's largest corporate debt defaulter after the 1997-98 Asian economic crisis. It was renamed IRPC in 2006 after the government had intervened in 2003 and PTT took control of it in late 2005 as part of the restructuring.

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