BANGKOK: Share prices for Thai Oil Pcl dropped on Friday after the Thailand oil refiner announced plans to offer new shares and sell stakes in a subsidiary to finance a US$1.2 billion investment in Indonesia's Chandra Asri Petrochemical TBK PT.
Shares in Thai Oil fell 10per cent in Friday's morning trading session at 05:00 GMT along a 1per cent decline in the benchmark index.
"In recapitalisation, there will be an equity offering of 10 billion baht (US$304.04 million)," the company's Executive Vice President of Finance Wanida Boonpiraks told reporters on Friday.
Thai Oil would also sell stakes in electricity firm Global Power Synergy Pcl for 20 billion baht to parent firm, PTT Pcl, she said.
PTT already owns about a third of GPSC, and Thai Oil holds 20.78per cent of shares in GPSC.
The purchase for 15.38per cent of Chandra Asri would initially be financed by 18-month bridge loans from banks and PTT.
The announcement marks another in a series of major investments by units of Thailand's state-owned oil and gas giant, PTT Group.
Earlier this month, PTT Global Chemical Pcl agreed to buy German coating resins maker Allnex for 4 billion euros (US$4.75 billion). GPSC has invested nearly US$1 billion in renewable projects across India and Taiwan.
The investment in Chandra Asri would expand Thai Oil's position of a refiner to petrochemicals.
"It's a jump start," said company president Wirat Uanarumit, who added that it would have taken the company eight years to build its own olefin petrochemicals supply chain.
(US$1 = 32.8900 baht)
(Reporting by Chayut Setboonsarng; Editing by James Pearson)