Moody's affirms PTT Chemical

Moody's Investors Service said it affirmed the Baa3 long-term rating of Thailand-based PTT Chemical PCL following the company's announcement that it will purchase from its parent PTT PCL the remaining 50% of PTT Polyethylene Co. Ltd. and Bangkok Polyethylene PCL that it does not own. The total consideration for the proposed transactions is 3.75 billion Thai baht.

Moody's said the affirmation reflects its view that the funding structure of the proposed acquisitions will have a neutral effect on PTT Chemical's capital structure and debt coverage measures. Adjusted debt to EBITDA is expected to remain below 2.5x for at least the next three to four years.

The PTT Polyethylene project requires significant capex of around 52 billion Thai baht in order to build a 1-million-ton ethane cracker and two polyethylene plants. However, Moody's said it views the capital cost to be manageable within PTT Chemical's rating.

The company will partly raise funding through a rights equity issue of 28 billion Thai baht. PTT announced that it will support the capital raising and Moody's believes that, even if other shareholders do not, the PTT uptake will be sufficient for PTT Chemical to maintain its current rating.

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