KUALA LUMPUR: Petronas Chemicals Group Bhd (PetChem) is selling a 50% stake in wholly-owned unit PRPC Polymers Sdn Bhd to Saudi Arabian Oil Co’s (Saudi Aramco) subsidiary under a planned estimated US$900 million (RM3.8 billion) deal to share in the polymer unit’s business risk.

In a statement to Bursa Malaysia yesterday, PetChem said it was selling the 50% stake in PRPC Polymers to Saudi Aramco’s wholly-owned subsidiary Aramco Overseas Holdings Coöperatief UA (AOHC).

The deal includes the divestment of 50% of any shareholder loans held by PetChem in PRPC Polymers to AOHC. The divestment consideration is 50% of the total project costs incurred so far.

“PetChem will share the project and operation risk with Saudi Aramco upon divesting 50% of the equity interest and 50% of the shareholder loans in PRPC Polymers to AOHC.

“PetChem will have a positive cash flow impact by decreasing its capex (capital expenditure) commitment as a result of Saudi Aramco’s 50% participation in PRPC Polymers. Subsequently, it will provide PetChem with the financial flexibility to pursue other strategic growth projects,” PetChem said.

PetChem said it inked the share purchase agreement (SPA) with AOHC last Friday for the divestment. On completion of the deal, PRPC Polymers will cease to be a subsidiary of PetChem.

PRPC Polymers’ principal activities are to develop, construct, commission and operate polymers and glycol plants for the production and sale of products. PRPC Polymers has not commenced operations since the date of incorporation.

In a statement on its website, Saudi Aramco said the strategic partnership with PetChem is to enhance the value and competitive positioning of its petrochemicals projects within Petronas’ Pengerang Integrated Complex (PIC) in Johor.

It said the signing of the SPA with PetChem is another positive milestone for Saudi Aramco after the signing of the SPA with PetChem’s parent company Petronas for equity participation in selected ventures and assets of the Refinery and Petrochemicals Integrated Development project last February.

The divestment is expected to be completed by March 15, 2018. PetChem’s shares, which were suspended between 9am and 10am yesterday for the announcement, rose one sen to close at RM7.30, for a market capitalisation of RM58.4 billion.