KUALA LUMPUR: Lotte Chemical Titan Holdings Berhad (LCT) plans to expand in Indonesia starting 2018 by allotting about RM4.9 billion of its RM5.9 billion initial public offering (IPO) gross proceeds to develop its plant facilities in the country.
The company currently has three plants in Merak, Banten province, on the main island of Java, spread over 31.5 hectares.
Its senior vice-president Philip Kong said as part of the company’s initiative in Indonesia, the company would develop an integrated petrochemical facility to increase its polyethylene production in the region.
Polyethylene is a common plastic used mainly in packaging such as plastic bags, bottles and films.
“LCT plans to start construction of the integrated facility plant sometime in 2018 or 2019, and targets to begin operation in 2023.
“We are doing the feasibility study now,” he told reporters here today after the launch of the company’s prospectus ahead of its proposed listing on Bursa Malaysia’s Main Market on July 11.
LCT is returning to Bursa’s Main Market after it was taken private six years ago in a US$1.25 billion deal. The IPO price is set at RM8 per share.
The IPO, involving a sale of 740.5 million shares or 30% of the enlarged share capital of LCT, will be the biggest in the country since Astro Malaysia Holdings Bhd’s October 2012 share sale, according to data compiled by Bloomberg.
“We are expanding in Indonesia because there is a huge market there for polyolefins and our initiative will contribute significantly to the success of the company moving forward.
“We are a home-grown company and it is only right for us to list the company in Malaysia,” he said when asked the reason LCT was not listing in Indonesia since it planned to expand in that country.
LCT produces plastics including polyethylene used in shopping bags and toys, as well as polypropylene which can be found in battery casings and car parts.
The company also makes olefins that are part of the manufacturing process for synthetic rubber and detergents.
International Trade and Industry Minister Mustapa Mohamed, who launched the prospectus, said the size of the IPO 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. LCT’s effort to drive growth both at home and abroad will also support the nation’s ambition for higher levels of fundraising in 2017,” he said.
LCT’s products are sold to over 60 countries with sales in Malaysia and Indonesia comprising 39% and 28% respectively of the total.
The company currently owns and operates 14 plants in Malaysia and Indonesia, including two crackers in Malaysia, which are supported by two co-generation plants, three tank farms and three waste water treatment facilities.