PETRONAS CHEMICALS GROUP BERHAD (459830‐K) RELATED PARTY TRANSACTION
1.0 INTRODUCTION Pursuant to Paragraph 10.08 (1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of PETRONAS Chemicals Group Berhad (“PCG” or “the Company”) wishes to announce that the Company has entered into a Related Party Transaction ("RPT") with PETRONAS Refinery and Petrochemical Corporation Sdn Bhd (“PRPC”) where the consideration of such RPT has exceeded the percentage ratio of 0.25% but is less than 5%.
2.0 TRANSACTION PCG has acquired from PRPC, a wholly owned subsidiary of Petroliam Nasional Berhad (“PETRONAS”), the entire equity in three companies namely PRPC Glycols Sdn Bhd, PRPC Polymers Sdn Bhd and PRPC Elastomers Sdn Bhd (“Project Companies”). The Project Companies will undertake petrochemical projects which are part of the Refinery and Petrochemicals Integrated Development (“RAPID”) project in Johor, Malaysia. PCG will pay PRPC a consideration of RM13,000, based on a willing buyer and willing seller basis, being the paid up share capital of the Project Companies. With this acquisition, PCG will assume the assets and the liabilities of the Project Companies amounting to approximately USD110 million. With the above transaction, the Project Companies will become wholly owned subsidiaries of PCG. However, based on current arrangements between PRPC and its existing partners, there may be potential dilution to PCG’s equity in the Project Companies. The payment for the paid up capital in the Project Companies of RM13,000 is expected to be paid to PRPC on 3 November 2015 while the liabilities of the Project Companies of USD110 million is expected to be settled by the respective Project Companies before the end of the year. Further information on PETRONAS, PRPC and the Project Companies is set out in Table A. 3.0 RATIONALE The acquisition provides PCG the opportunity to accelerate its strategy in achieving its vision and maximizing PCG’s shareholder value by strengthening its position as a petrochemical market leader in South East Asia. The acquisition supports both parts of PCG’s two‐pronged strategy by firstly increasing capacity of the existing product portfolio and expanding volumes to strengthen PCG’s existing market position; and secondly by diversifying PCG’s product portfolio further into differentiated and specialty chemicals. Participation in the RAPID project will give PCG a competitive advantage as it can benefit from a high degree of integration within and across the RAPID project facilities, as well as its close proximity to the high growth ASEAN market.
4.0 INTERESTED DIRECTORS I MAJOR SHAREHOLDERS Interested Directors Relationship Encik Md Arif Bin Mahmood Encik Md Arif Bin Mahmood is the Non‐Executive Chairman and is an appointee of PETRONAS. He is a Board Member of PETRONAS and sits on the Boards of several PETRONAS Group of Companies. He is also the Executive Vice President/Chief Executive Officer of PETRONAS Downstream Business. Datuk Sazali Bin Hamzah Datuk Sazali Bin Hamzah is an appointee of PETRONAS. He is the President/Chief Executive Officer of PCG and sits on the Boards of several PETRONAS Group of Companies. Zakaria Bin Kasah Zakaria Bin Kasah is an appointee of PETRONAS and sits on the Boards of several PETRONAS Group of Companies. Freida Binti Amat Freida Binti Amat is an appointee of PETRONAS and sits on the Boards of several PETRONAS Group of Companies. Interested Shareholder Relationship Petroliam Nasional Berhad PETRONAS is the major shareholder of the Company with (PETRONAS) equity of 64.35%. All directors nominated by PETRONAS abstained from voting during deliberation of the transaction at the Board of Directors’ meeting held today.