PTT Global Chemical Public Company Limited (GC), a global leader in the chemical business and PTT Group flagship company, is preparing to offer subordinated hybrid debentures, payable upon dissolution with the Issuer's right to early redemption and unconditional interest deferral ("subordinated hybrid debentures"). This transaction marks as the first offering from PTT Group after 10 years to issue subordinated hybrid debentures in Thailand, and this is an inaugural offering of subordinated hybrid debentures for GC. Currently, Fitch Ratings (Thailand) has rated GC's at AA(tha) with a "stable" outlook and rated the subordinated hybrid debentures at A+(tha). GC plans to use the proceeds from these subordinated hybrid debentures to repay its existing THB and USD denominated debts, to strengthen financial capital and to support GC sustainable growth. Additionally, on September 20, 2024, Fitch Ratings (Thailand) upgraded GC's outlook from "negative" to "stable" due to the improved debt ratio from the GC's deleverage plan.
Mr. Thitipong Jurapornsiridee, Executive Vice President - Finance and Accounting at PTT Global Chemical Public Company Limited (GC), revealed that GC is preparing to issue subordinated hybrid debentures, payable upon dissolution with the Issuer's right to early redemption and unconditional interest deferral, and the subordinated hybrid debentures will be offered to general public via the placement of Public Offering (Public Offering). The issuance will support debt reduction plans and strengthen GC's financial structure for future growth (#NextStepwithSustainableGrowth). GC believes these subordinated hybrid debentures will provide a stable and worthwhile alternative investment for retail investors, especially given the return of PTT Group's subordinated hybrid debentures issuance in the past 10 years.
Mr. Thitipong Jurapornsiridee, added that GC has established various measures to reduce debt and enhance profitability to ensure sustainable growth amid the cyclical fluctuations of the petrochemical business. During the gradual recovery of petrochemical industry, GC has adopted the 3 Steps Plus strategy to bolster competitiveness and growth. This strategy includes:
Currently, GC has a business restructuring plan that may involve accounting impacts such as asset impairments which are non-cash and one-time transactions. Nevertheless, this restructuring will strengthen GC business in the long run.
The upcoming subordinated hybrid debentures issued by GC aim to enhance flexibility and strengthen the capital structure to support sustainable future growth. The proceeds from this issuance will be used to repay both domestic and international GC's existing debt. GC's subordinated hybrid debentures will be counted as 100% equity in accounting terms, similar to the subordinated hybrid debentures issued by other companies.
The company expects to receive 50% equity credit from the three major global credit rating agencies: 1) Moody's Investors Service, 2) S&P Global Ratings, and 3) Fitch Ratings Inc., known as the "Big Three" in credit rating. Therefore, the debentures being issued will have a different structure compared to other subordinated debentures previously offered in Thailand, especially regarding the interest rate adjustments as Moody's will only grant 50% equity credit if there are no interest rate adjustments or step-ups in the first 10 years. According to S&P, GC expects to receive 50% equity credit only during the first 5 years and 6 months. After that, it will be considered entirely as debt. This aligns with GC's option to early redeem the subordinated hybrid debentures, exercisable from 5-years 6-months after the issue date, which is purposely set to manage the company's debt repayment profile accordingly.
Currently, GC is in the process of filing the registration statement and draft prospectus with the Securities and Exchange Commission (SEC), which has not yet taken effect. GC will announce the final interest rate and subscription date later. For general investors, the minimum subscription amount is 100,000 baht and in multiples of 100,000 baht. Those who are interested can study further details and the terms and conditions in the draft prospectus and inquires more information at the followings 12 arrangers:
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