Thailand's Rayong Refinery Plans $500 Mln June Ipo, Bankers Say

[Jai Dee]

Thailand's Rayong Refinery Plans $500 Mln June IPO, Bankers Say

April 20 (Bloomberg) -- Rayong Refinery Co., a wholly owned unit of Thailand's biggest energy company, plans to raise about $500 million in a June initial public offering to help fund increased output, bankers familiar with the sale said.

PTT Pcl's unit, based in Rayong province, 200 kilometers east of Bangkok, will begin marketing shares to investors next month, said the three bankers, who declined to be identified before an announcement. The sale would be Thailand's biggest since October 2004, according to data compiled by Bloomberg.

Rayong Refinery is tapping the market as the profit from processing oil into fuels and other products rebounds and record automobile sales in Thailand threaten shortages of gasoline and diesel. Refining margins in Asia surged 15 percent last week to $6.61 a barrel, according to Credit Suisse Group.

"The timing would be quite good,'' said Alan Richardson, who helps manage $3.2 billion at Baring Asset Management Co. in Hong Kong. "The faster they get it done the better.''

Rayong Refinery plans to sell new shares, the bankers said.

State-controlled PTT, Thailand's only member of the Fortune 500 list of the world's most valuable companies, will also sell some of its stake, according to the refinery's filing to the Securities and Exchange Commission in February.

Bangkok-based PTT plans to halve its stake in the refinery to 50 percent after the share sale, Prasert Bunsumpun, the parent company's president, said in November.

IPO Revival

Merrill Lynch & Co. and Morgan Stanley are arranging the share sale. Nick Footitt, a spokesman for Morgan Stanley in Hong Kong, declined to comment. Mark Tsang, a spokesman for Merrill in Hong Kong, couldn't be immediately reached for comment. Chainoi Puankosoom, Rayong Refinery's president, also couldn't be reached for comment.

A successful IPO may spark more share offers in Thailand, where government-linked sales have stumbled in the face of legal and political opposition. Thailand's share of the Southeast Asian IPO market has shrunk to 11 percent this year from 23 percent in 2005, according to data compiled by Bloomberg.

Thailand has had two IPOs totaling $68 million this year, according to Bloomberg data. The nation's largest IPO to date was a 32.5 billion baht ($836 million) share sale by Thai Oil Pcl in October 2004.

"Hopefully that will have a good showing and then people will get confidence back into Thai equity again,'' Richardson said. "I'm quite skeptical about anything that's government or politically sensitive.''

Out of Favor

Thai Beverage Pcl, the country's largest brewer, plans a $1 billion initial share sale in Singapore in May after anti-alcohol protesters blocked an offering in Thailand last year, bankers involved in the sale said.

A Thai court on March 23 ruled that state-owned power supplier EGAT Pcl's plan to raise 34.86 billion baht in an initial share sale was illegal, threatening the government's plans to sell other state assets. The IPO would have been the biggest in Thailand.

Sales of pickup trucks and other vehicles rose 12 percent in 2005 to 703,432 units, according to Toyota Motor Corp's Thai unit, which compiles the data for the industry. Thailand may begin gasoline imports by 2011 on surging demand and limited new capacity, the energy ministry said last year. PTT may tap its diesel reserves to prevent a shortage of the fuel, the Nation reported, citing the country's Energy Business Department.

Bangkok-based PTT became sole owner of the 145,000 barrel-a-day capacity Rayong Refinery in November 2004, when it bought Royal Dutch/Shell Group's 64 percent stake for $5 million as part of a rescue plan. PTT said it may merge Rayong Refinery with Aromatics (Thailand) Pcl after the IPO to cut costs and simplify the group's structure.