Thai chemical company PTT Global Chemical Pcl on Tuesday said it would not need to raise capital to finance a 4 billion euro ($4.74 billion) acquisition of German coating resins maker Allnex.
Its shares rose 6% on Tuesday, recovering losses from a day ago amid investor worries about a new share issuance.
“We don’t have to increase capital as some people expected,” chief executive Kongrapan Intarajang told reporters in an online briefing.
“We have enough cash, a capital raise is far away.”
The acquisition will be funded by cash and loans, its top finance executive Pattaralada Sa-Ngasang said.
The company has cash on hand of about 123 billion baht ($3.77 billion), said Pattaralada.
It also had a letter of credit from its parent firm, state-owned PTT Pcl, for 32 billion baht and a two-year loan agreement for 74 billion baht with PTT.
“Banks have also proposed loans of up to nearly $1 billion,” she said.
The combined sources of funds amounted to more than 155 billion baht, PTTGC said, above the 148 billion baht needed for the deal.
The deal is expected to conclude by the end of the year pending regulatory approval and would have no impact the company’s dividend payment ability, it said.
Allnex, whose products are used in the industrial metal, automotive and packaging industries, has annual revenue of 2 billion euros and employs 4,000 people worldwide.
The acquisition would bring PTTGC closer to its goal to expand the contribution from performance and green chemicals to a quarter of revenue by 2030 from 10% currently, Kongrapan said.
The company also has a target to have 30% of business from overseas by 2030, up from 16% in 2019.
Source: Reuters.com