Titan to Sell Almost 90% of the Firm to Chinese Oil Trader

Guangdong Zhenrong Energy Co. Ltd has agreed to buy 89.95% of the company for HK$175 million.

Titan Petrochemicals Group Ltd. (Titan) [HKG:1192] said today Chinese oil trader Guangdong Zhenrong Energy Co. Ltd (GDZR) has agreed to buy 89.95% of the company for HK$175 million (USD $22.6) through the subscription of 7 billion newly issued shares.

According to the press release, the proceeds of the deal, which was made on August 1, 2012, will be used to repay Titan's bondholders and provide working capital for the struggling firm.

In addition, and subject to liquidation proceedings of its StorageCo entity, GDZR will provide up to USD $40 million (HK$312 million) interim financing for the storage subsidiaries and provide up to USD $145 million (HK$1,131 million) to buy out Warburg Pincus' interest in Titan made through Saturn Storage Limited (SSL) in Titan subsidiary StorageCo, and Saturn Petrochemical Holdings Ltd. (SPHL) in Titan.

"This is an important step in providing a rapid resolution of the Company's current financial challenges to the benefit of all its investors, creditors, customers and employees," commented Titan Executive Director Patrick Wong Siu Hung.

"This Subscription Agreement with Guangdong Zhenrong Energy will create a stable platform from which Titan can ride-out the current turbulent market conditions and develop its business for the long-term and in the best interests of all our stakeholders," he added.

A spokesperson for Guangdong Zhenrong Energy said: "This Subscription Agreement demonstrates our commitment to making this significant investment in Titan Petrochemicals Group Limited, and represents an important first step in safeguarding the Company's future by enabling it to retain its key StorageCo assets.

"Our businesses are highly complementary and we are keen to establish a platform to ensure Titan achieves its full long-term potential."

Warburg Pincus has invested more than $215 million in Titan and in July filed a petition in the Supreme Court of Bermuda to wind up the business saying it was "insolvent and should be liquidated."

Titan said in July it received a proposal from GDZR for HK$150 million to HK$200 million (USD $19.0 million to USD $25.8 million) for "not less than" 51% of Titan.