JEDDAH, 17 September 2007 — The Saudi Industrial Investment Group (SIIG) will establish a new petrochemical company at a cost of SR18 billion ($4.8 billion) in joint venture with American Chevron-Phillips. The project is likely to start production in the last quarter of 2011, an official statement said.
“As part of its plan to establish the new petrochemical plant, the group will request doubling of its capital from SR2.25 billion to SR4.5 billion by issuing new shares with a nominal value of SR10 per share without premium,” the statement said.
The group will give priority to existing shareholders to purchase its new shares, the statement said, adding that the shareholders would be determined by the extraordinary general assembly meeting to be held by the end of this year.
SIIG will use the money collected from the sale of new shares to establish a new joint stock company, Petrochem. The new company will offer 50 percent of its shares for public subscription at the rate of SR10 per share without premium.
Petrochem will have a 65 percent stake in the new plant while Chevron-Philips will hold the remaining 35 percent. The new plant will produce adipic-acid and nylon.
The group will float its new shares for public subscription to increase its capital early next year while the joint stock company will announce its IPO later. “All this process will be carried out with the approval of authorities,” the group said in the statement carried by the Saudi Press Agency.
Suliman Al-Mandeel, managing director of the group, said Petrochem would have a capital of SR4 billion to SR4.4 billion. “We have not yet fixed the capital and it will be done after knowing the project’s cost.” The group has already filed an application to the Capital Market Authority (CMA) in order to increase its capital to finance its share in the new petrochemical plant. He hoped that the new company’s initial public offering would take place by the second half of 2008.
Petrochem will be owned by SIIG and the general public (IPO), with 50 percent each. The IPO portion will also be offered at par.
The group made a net income of SR287 million by Aug. 31, 2007 compared to SR389 million for the same period last year.
