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Thai Indorama to buy Old World I's MEG plant in USA
07
Feb '12
Indorama Ventures Public Company Limited (IVL), the world's leading vertically integrated Polyester Value Chain producer, has announced that it will acquire Old World Industries I, Ltd., and Old World Transportation Ltd. (“Old World”), a U.S.-based Ethylene Oxide (“EO”) and Ethylene Glycol (“EG”) producer for US$ 795 million.

Old World is the largest single EO/EG production facility in the U.S. with Crude EO capacity of 435,000 tons per annum. Mono Ethylene Glycol (MEG) is one of the key components, together with Purified Terephthalic Acid (PTA), in the manufacture of Polyethylene Terephthalate (PET) and Polyester Fibers and Yarns, both downstream products of IVL. IVL is already integrated into PTA in Europe and Asia and virtually integrated in the USA via co-location with a PTA supplier in Alabama. The acquisition is expected to be completed in Q1, 2012 subject to customary approvals.

The business intends to continue its commitment to the U.S. purified EO merchant market, in addition to the current glycol customer base.

Mr. Aloke Lohia, Group CEO of Indorama Ventures Public Company Limited, said, “I am delighted that we were able to acquire Old World in the USA as it represents a rare opportunity to integrate into MEG in the most competitive zone for feedstock availability. Competitiveness of petrochemicals in the USA has been bolstered because of the favorable gas price, relative to oil, due to the abundance of shale gas. By entering MEG now, IVL will be able to capture the premium margins that are expected to remain firm for the next 4-5 years when new capacities are likely to enter the market."

"Old World is located in Clear Lake, Texas, near Houston, which is the hub for petrochemical activity where the entire shale to ethylene feedstock is available through an extensive network of pipelines.

“The acquisition makes IVL the only global player in the Polyester space with integration into both PTA and MEG. At this time, when PTA pricing is weak on oversupply, MEG by contrast is seeing demand outstrip supply, allowing IVL to enter during the up-cycle and to maximize value from the PET chain to contribute positively to IVL's earnings,” Lohia said.

IVL recently announced it intends to build an integrated PTA, PET and Polyester Staple Fiber (PSF) plant in India following its acquisition in January 2012 of U.S.-based FiberVisions, the world market leader in polypropylene fibers.

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