Petronas Chemicals to divest 50% in PRPC Polymers to Saudi Aramco unit for RM3.8b

PETALING JAYA: Petronas Chemicals Group Bhd (PCG) is divesting 50% of the equity interest and 50% of shareholder loans held by PCG in wholly-owned subsidiary PRPC Polymers Sdn Bhd to Aramco Overseas Holdings Coöperatief U.A. (AOHC), a wholly-owned subsidiary of Saudi Arabian Oil Company (Saudi Aramco) for US$900 million (RM3.8 billion).
PCG had on Sept 29, 2017 entered into a share purchase agreement (SPA) with AOHC for the exercise. Upon completion of the divestment, PRPC Polymers will cease to be a subsidiary of PCG.
The divestment is a related party transaction in view of the inter-conditional arrangement between the SPA entered between Petronas Refinery and Petrochemical Corp Sdn Bhd (PRPC), a wholly-owned subsidiary of Petroliam Nasional Bhd (Petronas), which is the major shareholder of PCG, with AOHC on Feb 28, 2017, for the divestment of PRPC’s 50% stake and 50% of any shareholder loans PRPC holds in PRPC Refinery and Cracker Sdn Bhd (PRPC RC); and the SPA entered into between PCG and AOHC, whereby the closing and termination of one SPA is dependent on the other.
The divestment will provide benefits to PCG, where among others, PCG will share the project and operation risk with Saudi Aramco upon divestment. Saudi Aramco will supply up to 70% of crude supply to PRPC RC, which eventually will lead to the sustainability of feedstock supply from PRPC RC to PRPC Polymers.
The proceeds to be received from the divestment will be applied towards capital and operational expenditures as well as strategic growth projects in accordance with PCG’s business plans.