Advanced chairman says new project won’t impact financial performance

Advanced Petrochemical Co.’s financial performance is unlikely to be hit by the new propylene and polypropylene project, thanks to the company’s strong solvency ratio, zero debts and creditworthiness, chairman Khalifa Al Mulhem told CNBC Arabia on Sunday.

Several banks showed interest in financing the company’s projects. The petrochemical producer is studying various options to select financing banks.

Nine months ago, Advanced embarked on the newly-announced project, after obtaining the approval of the energy ministry to receive the required feedstock.

The company also conducted a feasibility study, selected the technical partner and acquired the land plot required for the project, Al Mulhem said.

Several small projects, including car plastics manufacturing, and the isopropanol used in detergents, will stem from the new propylene and polypropylene plant.

Advanced is studying a number of projects, but the final decision will be based on the related feasibility studies and available feedstock.

“Advanced is focusing on expanding its projects. However, if a merger opportunity is feasible for the industry and the company’s shareholders, we will study it,” Al Mulhem added, shrugging off any possibility of mergers and acquisitions at present.

Moreover, Al Mulhem said global demand is still steady, but prices have declined for several reasons, mainly the US-China trade war and the coronavirus outbreak, expecting demand to recover when the coronavirus is over.

Advanced expects to continue receiving feedstock from the energy ministry and Saudi Aramco at current prices, which gives the company an advantage.

The company has a solid position and aims to maintain dividend distribution, Al Mulhem said, expecting dividend distribution to continue amid the current conditions.

Advanced announced that its subsidiary, Advanced Global Investment Co. (AGIC) signed, on March 27, a partnership agreement with SK Gas Petrochemical Pte. Ltd. (SKGP), a unit of SK Gas Co. Ltd. to incorporate a new JV called Advanced Polyolefins Company.

The new entity will build and operate propane dehydrogenation (PDH) and polypropylene (PP) at a total cost of approximately SAR 6.75 billion.