SET-listed Bangchak Petroleum Plc (BCP), a majority state-owned refiner, has signed an agreement to buy most of a bioethanol factory in Chachoengsao for 765 million baht.
President Vichien Usanachote said the board on Wednesday agreed to the purchase of 85% of a factory making fuel-grade ethanol from cassava developed by Sima Inter Product Co on 541 rai in Chachoengsao's Phanom Sarakham district.
With production capacity of 150,000 litres a day, the factory is scheduled to be operational in the fourth quarter.
Under the agreement, Bangchak will acquire 7.65 million ordinary shares in the new subsidiary BCP Bioethanol from Sima for the production and distribution of ethanol and cassava starch slurry as well as its permit.
After the deal is completed, Bangchak will own 85% of BCP Bioethanol and Sima the rest.
"The investment is in line with Bangchak’s strategy of expaning its renewable energy business to increase corporate value and diversify risks," said Mr Vichien.
The bioethanol plant is located just 120 kilometres from Bangchak's refinery and oil depot in Bangkok, while Sima has more than 30 years' experience in the cassava business.
The transaction will help to increase Bangchak's earnings before interest, taxes, depreciation and amortisation by 160 million baht, Mr Vichien said.
He said BCP Bioethanol would be established with paid-up registered capital of 900 million baht and a par value of 100 baht. The transaction will be paid all in cash.
Earlier Bangchak acquired 21.28% of Ubon Bio Ethanol Co, which has daily production capacity of 400,000 litres.
Bangchak requires 70,000 litres of ethanol a day to serve its production of gasohol, expected to rise to 1 million litres a day by 2020.
"Thanks to the increasing confidence of motorists and the popularity of gasohol, car makers have continued to launch new models that are compatible with the fuel. Thus, we believe this business has growth potential in the years to come," said Mr Vichien.
On Thursday, Bangchak announced it would pay A$22.2 million (665 million baht) for a nearly 20% stake in Australian oil and gas explorer Nido Petroleum Ltd in a move to expand the refiner's international portfolio and diversify business risks.
BCP shares closed yesterday on the SET at 28.75 baht, unchanged, in trade worth 67.8 million baht.