With several unclear factors including the domestic political environment, and falling oil prices and refining margins, it is not the right time to float the shares, PTT president Prasert Bunsumpun said yesterday.

PTT, the country's largest oil and gas firm, holds 36 per cent of Star Petroleum Refinery while Chevron Corp has the rest.

Whether Star Petroleum Refinery will go public depends on shareholders, he said.

 "If Chevron wants to sell its stake in Star Petroleum Refinery, PTT will allow RRC [Rayong Refinery Plc] to buy it because the two companies are doing the same business. Besides, PTT doesn't want to directly hold 100 per cent of Star Petroleum Refinery," Prasert said.

PTT's plan to consolidate two of its other units - Aromatics (Thailand) and Rayong Refinery - would still move ahead and reach fruition early next year, he said.

PTT yesterday signed a US$300-million (Bt11 billion), seven-year loan with four foreign banks - Bank of Tokyo-Mitsubishi UFJ Ltd, Sumitomo Mitsui Banking Corp, Barclays Capital and Mizuho Corp Bank.

The loan carries an interest rate 0.265 of a percentage point above the one-year London Interbank Offering Rate.

The company said in a statement it would use the loan to increase its working capital, support investment plans and refinance debt.

PTT said in the same statement that the entire group - including exploration and production, petrochemical, and refinery units - plans to invest a combined Bt500 billion until 2010, with Bt200 billion to be invested by PTT alone.

Prasert said PTT plans to borrow Bt26 billion in loans next year as part of its five-year investment plan.

Pichai Chunhavajira, PTT senior executive vice president, said the company might raise funds in US dollars to match its petrochemical revenue structure.

The company's liabilities are more than Bt100 billion, of which 25-30 per cent is in the greenback. The ratio would probably increase next year.

Liabilities of the PTT Group are more than Bt300 billion, split evenly between baht and dollar.

The greenback is expected to weaken further next year, but it would not help the company's finances, Pichai said. The small gain in foreign-exchange terms would be offset by the decline in gross margin due to the stronger baht.

PTT has not decided yet whether to raise funds next year by tapping the equity or the bond market.

The decision depends on the company's debt-to-equity (D/E) ratio, which it wants to maintain at 0.5 times. Also, the funding costs of the two markets are expected to be not much different.

Somruedi Banchongduang

The Nation