Titan to "Vigorously" Defend Itself Against Legal Action

A petition to wind up Titan is expected to be heard in Bermuda on August 16, 2012.

Titan Petrochemicals Group Ltd. (Titan) [HKG:1192] intends to "vigorously" defend itself against legal action brought by Grand China Logistics (GCL) according to a company announcement, which also addressed claims of insolvency.

Titan detailed that GCL commenced legal proceedings against the company and two of its subsidiaries to terminate the GCL transaction for the sale of the Titan terminal at Quanzhou and for the repayment of monies paid to Titan totaling RMB740 million, approximately HK$912.57 million (US $118 million) plus interest.

Titan asserts that it entered into a supplemental agreement with GCL in July of 2011 to cancel net profit guarantees which if met would have impacted the payment schedule, and to replace the existing payment amounts and schedule to accelerate the timing for the payments.

Titan say the payments due under the new agreement have not been made.

Ship & Bunker reported Friday that Warburg Pincus' single purpose entities Saturn Storage Ltd., and Saturn Petrochemicals Holdings ltd., had exercised rights of redemption for Preferred Shares and Convertible Notes held by the Saturn companies under investment agreements in excess of $215 million made by Warburg Pincus.

As the redemptions could not be met, the Saturn companies filed notices of petition to liquidate the affairs of Titan as Warburg claims it is insolvent.

Titan answered Saturn's allegations by stating in the announcement that it is in active discussions with an independent third party to purchase an equity stake in the company and have received a non-binding letter of indication from the party for a purchase price of US $260 million for a 51% stake.

Should the equity transaction complete, or complete in a different form than originally contemplated, Titan say it will likely result in a change of control in the company and its completion will therefore be subject to a whitewash waiver being granted under the Hong Kong Stock Exchange Takeovers Code.

Saturn Companies' petition against Titan to wind up and appoint liquidators is expected to be heard in Bermuda on August 16, 2012.