PTT will divest all its holdings in PTT Polyethylene and Bangkok Polyethylene to its subsidiary PTT Chemical as part of a plan to restructure its petrochemical business in the olefins chain.

The national oil and gas firm will sell 11.5 million shares in PTT Polyethylene Co Ltd and 85 million shares in Bangkok Polyethylene Plc (BPE) to PTT Chemical Plc (PTTCH) for Bt1.75 billion and Bt2 billion, respectively.

PTT Plc will also buy 100,000 shares in PTT Polymer Marketing Co Ltd held by BPE for Bt10 million.

The group said in a filing to the Stock Exchange of Thailand yesterday that it has set a policy of establishing PTT Chemical as its flagship for investment in ethylene-chain, gas-based olefins under its petrochemicals and refining business.

The restructuring is aimed at increasing the group's competitiveness in the global market, clarity in its business structure and value in its gas business.

PTT also promised to support PTT Chemical in case a capital increase might be needed to ensure smooth development of the PTT Polyethylene project.

PTT owns 50.03 per cent of PTT Chemical.

Besides restructuring its petrochemical business in olefins chain, PTT plans to consolidate two subsidiaries - Aromatics (Thailand) Plc and Rayong Refinery Plc.

PTT Chemical said it would increase its registered capital from Bt11.6 billion to Bt15.19 billion by issuing 358.97 million shares for sale to existing shareholders and via private placement.

Shareholders will be entitled to subscribe to one new share for every 3.151 shares held at Bt78 each - below the price at the close of the market yesterday of

If the rights issue is fully subscribed, it will raise Bt28 billion. The proceeds will be used to expand its production capacity over four years.

The recapitalisation is subject to approval from shareholders at their meeting on September 28.

Seamico Securities Plc has downgraded its recommendation on PTTCH from "buy" to "fully valued" after estimating that stockholders would see a 24-per-cent dilution from the recapitalisation.

PTT's board declared its first-ever interim dividend of Bt5 per share, payable on September 22.

PTT had been widely reported as likely to pay an interim dividend after the Finance Ministry urged state enterprises to contribute more funds to state coffers.

PTT Chemical posted a second-quarter net profit of Bt4.16 billion.