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March 21, 2018 02:00 AM

New JV formed to buy unfinished M&&G Texas plant for more than $1 billion

Frank Esposito
Senior Staff Reporter
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    Adler Scaffolding/M&&G
    Construction at M&&G's Corpus Christi plant in 2015.

    Three global materials firms have formed a joint venture to buy an unfinished PET resin and feedstocks plant in Corpus Christi, Texas, for $1.125 billion.

    The JV has been named Corpus Christi Polymers LLC. Its three partners are Alpek SAB de CV of Mexico, Indorama Ventures Holdings LP of Thailand and Far Eastern Investment Ltd. of Taiwan.

    Construction on the massive plant — which would have more than 2 billion pounds of annual PET production capacity — was stopped last year when owner M&G Group filed for bankruptcy in Italy and the U.S. The new deal also includes certain M&G intellectual property and a desalination/boiler plant providing water and steam needs to the Corpus Christi plant, officials said in a March 21 news release.

    In addition to $1.125 billion in cash, the deal includes "other capital contributions" from the buyers, officials added. The plant is estimated to be 80 percent completed. When online, it's expected to be the largest single line vertically integrated PTA-PET production facility in the world and the largest PTA plant in the Americas.

    The site's annual PET production capacity will be 2.4 billion pounds, while its PTA output will be almost 2.9 billion pounds. A timeline for project completion will be communicated at a later stage, officials said.

    Each of the JV's three partners will have the right to receive one-third of the capacity of PTA and PET produced at the Corpus Christi plant. Each also will independently procure its raw materials and will independently sell and distribute their corresponding PTA and PET.

    The closing of the transaction is subject to approval by the bankruptcy court and governmental authorities.

    Each of the partners has played a role at different stages of M&G's bankruptcy saga, which was caused in part by cost overruns on the Corpus Christi plant. At the time of the bankruptcy filing, M&G owed $49 million to Alpek for supplies of PTA. Alpek, based in Monterrey, Mexico, briefly stopped shipments of a PET feedstock to two plants operated by M&G in Mexico and Brazil as a result of the debt.

    Alpek also made the unusual move of announcing the stopped shipments and the unpaid debt in a news release. Prior to M&G's collapse, Alpek, which also owns North American PET maker DAK Americas, had agreed to distribute more than 1 billion pounds of PET made at the new Corpus Christi unit.

    In a financial filing late last year, Alpek said it had $643 million of asset impairment exposure from M&G, as well as a $223 million tax credit. In addition to PET and PTA, Alpek makes polypropylene, expanded polystyrene and caprolactam, a feedstock used in nylon resin production.

    Bangkok-based Indorama — another North American PET maker — was owed almost $60 million by M&G for raw materials. Earlier this month, Indorama acquired a former M&G PET plant in Brazil. Indorama ranks as one of the world's largest PET makers and also makes a range of other petrochemicals.

    Far Eastern, which operates as Far East New Century Corp. (FENC), acquired two former M&G assets in February: a PET plant in West Virginia and an R&D center in Ohio. Indorama had been a bidder on those assets. Taipei-based FENC also makes fibers, yarn, fabrics and apparel.

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