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Titan Petrochemicals to branch into shipbuilding

Titan Petrochemicals to branch into shipbuilding

Hong Kong: Integrated oil logistics provider Titan Petrochemicals Group (TPG) is to expand its activities into shibuilding. The group has signed an agreemnt to  acquire a 100% interest in Fujian-based Titan Quanzhou Shipyard from a sister company in Singapore. In a statement, TPG said, "The acquisition is in line with Titan's stated strategy of transforming its business away from the volatile VLCC business, towards an integrated oil logistics model, in order to accelerate growth and increase stability in earnings."

The purchase, worth $170m, consists of approximately $57m in cash and $113m in shares. The company has made it clear that section of shares worth $29m is subject to a three-year earn-out arrangement.

TPG ceo Barry Cheung (pictured) said: "We believe that now is the right time to bring Titan Quanzhou Shipyard into the Group's business portfolio. The yard is developing very rapidly and its design features will allow it to benefit from the favourable and robust market environment. This transaction will further transform the composition of Titan's earnings base to a well-balanced and diversified portfolio, enabling us to create sustainable value for our shareholders going forward."    

"The structure of this transaction allows Titan to capture the significant upside in the shipyard's business plan, whilst at the same time providing a degree of performance protection," Cheung added.

Titan Quanzhou Shipyard, which commenced operations in 2006, is a multi-functional facility focused on ship repair, shipbuilding and offshore engineering. It currently boasts an order book of 22 vessels, amounting to approximately $210m.

The transaction is subject to independent shareholder approval as well as customary closing conditions and is expected to close in October.  [03/09/07]