KUALA LUMPUR, 16 June 2017 – Lotte Chemical Titan Holding Berhad (“LCT” or “the Company”), the largest integrated producer of olefins and polyolefins in Malaysia, today launched its prospectus in conjunction with its proposed listing on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”), and its homecoming to the Malaysian equity markets.
The initial public offering (“IPO”) will see the sale of approximately 740.5 million shares, or approximately 30.0% of the enlarged issued share capital of LCT, comprising an institutional offering of 684.7 million IPO shares, and a retail offering of approximately 55.8 million IPO shares, representing approximately 27.7% and 2.3% of the enlarged issued share capital of LCT, respectively. The IPO includes an over-allotment option of approximately 55.5 million shares, or approximately 2.3% of the enlarged issued share capital of LCT, for purposes of price stabilisation.
At the retail price of RM8.00 per share, LCT is expected to raise gross proceeds of approximately RM5.9 billion through the base offering of this IPO and achieve a post-listing market capitalisation of approximately RM19.7 billion. With this, the IPO for LCT will be the largest in Malaysia since August 2012 and the largest in Southeast Asia since May 2013. The final retail price will be equal to the lower of the retail price of RM8.00 per IPO share or the institutional price to be determined by way of bookbuilding.
LCT Chairman, Tan Sri Dato’ Abdul Rahman Mamat, said, “Through this IPO and LCT’s upcoming listing, LCT will introduce to both the local equity market and local and foreign institutional investors, a fast-growing company in the petrochemicals sector that develops innovative technologies and performance materials, a strong culture and a stronger management team backed by its solid lineage.”
– Not for distribution in the United States –
“The funds generated from the IPO exercise will enable LCT to undertake its expansion plans
in the thriving Southeast Asian environment, and create real, lasting value for LCT’s
Established in 1991, LCT is Malaysia’s first standalone producer of polyolefins and received
Pioneer Status from MIDA in 1995. Today, LCT is Malaysia’s largest integrated producer of
olefins and polyolefins. LCT is also the fourth largest polyolefins producer in Southeast Asia
in terms of production capacity in 2016. For the same year, LCT’s production represents a
53% capacity share in polyethylene production and a 100% capacity share in polypropylene
production in Malaysia as well as a 57% capacity share in polyethylene production in
LCT’s sites are in Malaysia and Indonesia. The Company currently owns and operates 14
plants (including two crackers in Malaysia) which are supported by on-site facilities,
including two co-generation plants, three tank farms and three waste water treatment
facilities. LCT capitalises on the scale of its integrated production facilities in Malaysia,
applies operational excellence to achieve operational stability and optimal plant utilisation,
and benefits from production efficiency initiatives designed to optimise profitability in the
LCT’s nameplate capacities have increased over their original capacity through
debottlenecking and continuous efficiency enhancements, achieving an annual production
volume of 2,703 KTA for the year ended 31 December 2016. Its total plant utilisation rate for
its crackers improved from 95% in 2014 to 100% in 2016.
According to independent market researcher, Nexant Asia Limited, the petrochemical
industry demand is primarily influenced by economic activity while supply is affected by new
capacity additions. In times of economic growth, profitability is high resulting in multiple
new investments in plant capacity. Global demand for polyolefins exhibited good growth in
2016. An estimated demand of 154 million tonnes in 2016 represented around 4.0%
consumption growth over 2015.
Nexant forecasts total polyolefins consumption in Southeast Asia to grow at a compound
annual growth rate of 4.4% over the period 2017 to 2027, with demand growth highest in
developing regions which provide significant consumption growth potential for material
“On the back of steady growing demand in the Southeast Asia region that supports the
increase in capacity, LCT is pursuing opportunistic investments to expand and diversify our
product portfolio and optimise our existing operations. We also feel that our dominant
position enhances our competitiveness vis-à-vis other producers in the region,” said Lee
Dong Woo, President and Chief Executive Officer of LCT.
Lee said that LCT’s has benefitted from the relationship with its parent company as Lotte
Chemical Corporation’s operational expertise and industrial know-how has helped LCT grow
to become the company it is today. He added, “Our recent investments in the Tanjung
Langsat and Pasir Gudang plants have effectively made LCT one of Lotte Chemical
Corporation’s largest manufacturing concerns outside of South Korea.”
LCT’s products are sold to over 60 countries with Malaysia and Indonesia contributing 39%
and 28% respectively of total sales. The prospectus states that LCT aims to pay dividends in
the amount equal to approximately 50% of its consolidated net profits of every fiscal year
after taking into account working capital and maintenance capital expenditure requirements
and subject to the requirements under the Companies Act 2016. In Malaysia, LCT’s
operating profits jumped from a mere approximately RM58 million in 2014 to approximately
RM1.7 billion on the back of approximately RM8.1 billion in revenue for the financial year
ended 31 December 2016.
Proceeds from the IPO will be utilised over the next 12 to 36 months to finance the
Company’s expansion in Malaysia and Indonesia. This includes approximately 83.2% of gross
proceeds to partially fund the development of an approximately RM15.5 billion integrated
petrochemical facility in Indonesia to increase its ethylene production by up to 1,000 KTA;
approximately 10.5% for the construction of a new polypropylene plant in Johor to increase
production by 200 KTA; and approximately 3.7% to upgrade its existing naphtha cracker to
increase the production of ethylene, propylene and BTX.
In addition, LCT has a joint venture with Lotte Chemical Corporation for the US Shale Gas
Project to construct and operate an ethane cracker plant and a monoethylene glycol plant in
the United States of America.
Minister of International Trade and Industry, Dato’ Sri Mustapa Mohamed, who officiated
the launch, said, that the size of this listing confirmed Malaysia’s position as one of the
preferred destinations for investment.
“This IPO will contribute significantly to the expansion of Malaysia’s capital markets by
increasing the liquidity needed to fuel economic growth, and LCT’s efforts to drive growth
both at home and abroad will also support the nation’s ambition for higher levels of
fundraising in 2017. The positive measures undertaken by the Malaysian government to
ensure steady growth for the economy and its capital markets will complement LCT’s
strengths to bring about a successful IPO exercise,” Dato’ Sri Mustapa said.
En route to its listing on Bursa Securities on 11 July 2017, the Company has secured five
cornerstone investors, namely Permodalan Nasional Berhad, Maybank Asset Management
Sdn Bhd, Maybank Islamic Asset Management Sdn Bhd, Eastspring Investments Berhad and
Great Eastern Life Assurance (Malaysia) Berhad who have agreed to severally and not jointly
acquire an aggregate of 136 million IPO shares, representing approximately 18.4% of the
base offering of the IPO.
Maybank Investment Bank Berhad has been appointed as Principal Adviser, Joint Global
Coordinator, Joint Bookrunner, Managing Underwriter and Joint Underwriter for the listing
exercise. Credit Suisse Securities (Malaysia) Sdn Bhd, Credit Suisse (Singapore) Limited and
JPMorgan Securities (Malaysia) Sdn Bhd are the Joint Global Coordinators and Joint
Bookrunners. The other Joint Bookrunners are CIMB Investment Bank Berhad, Nomura
International (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation
Limited, Singapore branch. CIMB Investment Bank Berhad, Affin Hwang Investment Bank
Berhad and MIDF Amanah Investment Bank Berhad are the Joint Underwriters.
About Lotte Chemical Titan Holding Berhad
Lotte Chemical Titan (LCT) produces Malaysia’s most comprehensive portfolio of olefins and polyolefins which
contribute to the enhancement of everyday life.
Established in 1991, LCT is Malaysia’s first standalone producer of polyolefins. It is also Malaysia’s largest
producer of olefins and polyolefins. LCT’s production site in Malaysia consists of 11 plants, two co-generation
plants and three tank farms. They are located on two sites in Pasir Gudang and Tanjung Langsat in the state of
Johor. Underground pipelines, shared utilities and controls enable facilities on these sites to operate as a single
integrated petrochemicals complex. Vertical integration of olefins and polyolefins production has enabled the
company to add value and realize gains along the value chain while our customers have the assurance of
consistent quality and dependable supply. This integration facilitates higher operating rates and cushions the
impact of cyclicality.
In 2006, Lotte Chemical Titan acquired PT Lotte Chemical Titan Nusantara, Indonesia’s largest polyethylene
plant. This acquisition boosted its polyethylene capacity by about 80%, making LCT one of the largest
producers of polyolefins in Southeast Asia. LCT was acquired by Lotte Chemical Corporation in 2010 and since
then, has become one of Lotte Chemical Corporation’s largest overseas subsidiaries.