Alternative Titan Restructuring Plan Submitted

SPHL and SouthernPec say their proposal will help the company make a return to profitability

A Joint Venture Company formed by Warburg Pincus, LLC (Warburg Pincus) entity Saturn Petrochemical Holdings Limited (SPHL) and SouthernPec Corporation (SouthernPec) on Monday gave details of their alternative restructuring proposal for Titan Petrochemicals Group Ltd. (Titan) [HKG:1192].

Warburg Pincus, who has invested more than $215 million in Titan, recently said Titan's proposal was "unrealistic" and "has significant flaws."

The companies said that under their proposal the Joint Venture Company will issue new shares and pay HKD 208 million (USD $26.84 million) in cash and up to HKD 382 million (USD $49.28 million) in monies owned to SPHL by Titan for 88% of the firm's new equity.

According to an emailed statement, the companies say the advantages of their proposal include their consideration, which totals up to HKD 590 million ($76 million), is 3.4 times that of Titan's proposal.

New 6 year Bonds with a face value of 80% and bearing zero interest would also be issued to scheme creditors, compared to 7-10 year bonds, and there would be a 25% greater immediate cash recovery for creditors.

The statement also said there were "strong synergies" between SouthernPec's existing businesses and that of Titan which would allow it to inject assets such as four Very Large Crude Carriers (VLCCs), five refuelling ships, and two chemicals tankers into the business.

Also, as monies owed to SPHL, who it says is "potentially" their largest single creditor, would be converted in equity it would reduce Titan's debts.

Mr. Xiao Liangping, Chairman and President of SouthernPec said, "We are delighted that Warburg Pincus has invited us to join forces in the proposed restructuring of Listco [Titan]," adding that their proposal would help the company make a return "to profitability and to build its long term potential."

"The joint venture Proposal delivers superior returns when compared to the alternative being offered [by Titan]," commented Dr. Bo Bai, an Executive Director from Warburg Pincus.

At the first hearing of the liquidation petition in Bermuda on August 16, 2012 the court adjourned the hearing until September 5, 2012, with Titan saying the decision recognised "the complexity of the situation and diverse interests of all the parties involved."

The SPHL and SouthernPec statement said that at the September 5, 2012 hearing it expected the authority of Titan's Board to be removed and joint provisional liquidators to be appointed in their place to review the different restructuring proposals.