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Old World deal helps Indorama on feedstock integration

By: Gurdip Singh

February 7, 2012

BANGKOK (Feb. 7, 1:30 p.m. ET) — Thailand’s Indorama Ventures Public Co. Ltd. plans to acquire Old World Industries I Ltd. and Old World Transportation Ltd., a U.S.-based ethylene oxide and ethylene glycol producer, for $795 million.

Old World makes automotive antifreeze, but mono ethylene glycol is also a key component in purified terephthalic acid, a feedstock for PET resins.

The deal is scheduled to be completed in the first quarter of this year, according to Bangkok-based IVL.

IVL has already integrated into PTA in Europe and Asia and virtually integrated in the USA via co-location with a PTA supplier in Alabama.

“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,” said Aloke Lohia, group CEO of Indorama Ventures Public Co. Ltd.

“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.”

The acquisition makes IVL the only global player in polyester with integration into both PTA and MEG, he said.

Old World is located in Clear Lake, Texas, near Houston.

The deal was being financed in part by new credit facilities granted by Siam Commercial Bank and cash available with IVL from earlier fund raising activities, said IVL.

Evercore Partners and HSBC were financial advisors to IVL and Allen & Overy acted as legal advisors. The Company received market and technical due diligence by CMAI, ERM and Jacobs.

William Blair were financial advisors to Old World and Bracewell & Giuliani advised Old World.