1.0       INTRODUCTION 
Pursuant to Paragraph 9.03 of the Main Market Listing Requirements of Bursa Securities Malaysia Berhad, we wish to inform that the Board of Directors of the Company, has today, approved the cessation of Butanediol (“BDO”) Complex (“Cessation”) by BASF PETRONAS Chemicals Sdn. Bhd. (“BPC”) as part of portfolio realignment.
2.0     BACKGROUND ON BPC BDO BUSINESS  
BPC is a joint venture company between BASF NEDERLAND B.V (60%) and PETRONAS Chemicals Group Berhad (40%) for the propylene and butane derivatives plant located in Gebeng, Pahang. 
BPC’s BDO business started its operation in 2004 with nameplate capacity of 100,000 metric tons per year. It manufactures and sells three key products, namely Butanediol, Tetrahydrofuran and Gamma-butyrolactone, which  are versatile intermediates used in the chemical industry. It is mainly used in the manufacturing of engineering plastics, i.e. Polybutylene Terephthalate. It is also used in the application of polyurethane in the leather industry. In certain applications, it is also used to manufacture hot melt adhesive.
3.0     RATIONALE 
The Cessation is part of PCG’s ongoing review of its product portfolio focusing on long term sustainable growth and strengthening PCG’s strategy to focus more on high-value chemicals portfolio. This is also aligned with the strategy undertaken by PCG’s partner in BPC, i.e. BASF. In addition, the Cessation is also due to significant overcapacities in the region as a result of recent investments in coal-based BDO production.
4.0     DETAILS OF BDO BUSINESS CESSATION  
BPC will be closing its BDO plant at Kuantan, Malaysia in March 2021. This Cessation will not impact other plants within the facility. BPC will be reaching out to all its customers to support a smooth transition and will continue to serve its customers in the region with other products from BPC.
5.0      FINANCIAL EFFECTS 
As a consequence of the Cessation, BPC will record a one-off charge estimated at USD139 million (RM577 million) in the 4th quarter of 2020. The amount mainly relates to write-off, impairment, provision for decommissioning, dismantling and personnel severance cost. At 40% PCG shareholding, the estimated financial implication to PCG is at USD56 million (RM232 million).
6.0      APPROVALS REQUIRED
The Cessation is not subject to the approval of PCG’s shareholders.
7.0       DECLARATION BY DIRECTORS 
No directors and/or major shareholders of PCG or persons connected to them have any interest directly or indirectly in the Cessation.
This announcement is dated 18 November 2020