PetChem unit executes RM3.92bil bridge loan

Proceeds to fund part of project cost and reimbursements

PETALING JAYA: PRPC Polymers Sdn Bhd, a wholly owned subsidiary of Petronas Chemicals Group Bhd (PetChem), has executed a bridge loan agreement of US$1bil (RM3.92bil) from various local and international banks.

According to a Bursa Malaysia filing yesterday, the said proceeds will be utilised to fund part of the project cost and will include reimbursement of project costs already incurred by PetChem.

The bridge loan is a temporary loan which is expected to be repaid once long-term project financing is secured at a later date.

It has a tenure of 12 months, with an extension of six months at the discretion of PRPC Polymers and is effective from the date of execution of the bridge loan agreement.

The execution of this bridge loan fulfils one of the conditions precedent contained in the share purchase agreement in relation to the proposed disposal of a 50% equity interest and 50% of any shareholders loan held by PetChem in PRPC Polymers to Aramco Overseas Holdings Cooperatief U.A.

Upon completion of the divestment, PetChem and Aramco Overseas will have 50:50 joint ownership in PRPC Polymers.

“The lenders of the bridge loan have requested Petronas and Saudi Aramco, being the holding companies of PetChem and Aramco Overseas, respectively, to provide corporate guarantees on several and not joint basis as security.

“In view of the corporate guarantee provided by Petronas to the bridge loan lenders, PetChem has entered into a back-to-back guarantee arrangement through a binding letter of undertaking issued to Petronas,” said PetChem.

PRPC Polymers’ principal activities are to develop, construct, commission, and operate polymers and glycol plants for the production and sale of the said products.

The company has not commenced operations as the plants are currently under construction in Pengerang, Johor, and are expected to be completed next year.

As at Dec 31, 2017, PetChem is the sole shareholder of PRPC Polymers, with a total shareholding of RM1.2bil, comprising eight ordinary shares and 24,148 redeemable preference shares. Meanwhile, Aramco Overseas, a subsidiary of Saudi Arabian Oil Company, is a fully integrated global petroleum and chemicals enterprise which manufactures synthetic rubber and polymer products through its subsidiaries.