Formosa Plastics Group (台塑集團), the nation's largest diversified industrial company, plans to merge four US units and sell shares in the combined entity, said Lee Chih-tsuen (李志村), president of Formosa Plastics Corp (台塑), the group's flagship.
Formosa Plastics Group hopes to sell shares in the new company in the US next year, Lee told reporters after Formosa Plastics Corp's annual shareholders meeting in Taipei yesterday.
"There are a lot of opportunities in the US capital markets and we aren't using them at the moment," Lee said. "We're combining the units because the US market likes large-scale companies."
The proposed share sale would help the company raise funds as it seeks government approval to invest as much as US$5 billion in a chemical plant in China. Taiwan is developing a surplus of chemical production, prompting Formosa Plastics to pursue growth abroad.
"The listing would help them become more flexible in using funds," said Julian Chen, who manages the equivalent of US$15 million for Invesco Taiwan Ltd (景順投信), including shares of Formosa Plastics Corp. "Funds raised in the US would help them expand in the petrochemical industry."
The four companies, two units of Formosa Plastics Corp (台塑石化) and two of Nan Ya Plastics Corp (南亞塑膠), produce petrochemical and plastic products including polyvinyl chloride and plastic pipes, according to the group's Web site. The group also owns natural gas wells in the US.
Details of the share sale, such as how much would be raised, had not been decided on, Lee said.
The Formosa Plastics Group is expanding in China, partly to take advantage of increasing demand there, Lee told shareholders.
Formosa Plastics Corp expects annual sales from products it makes in China to reach NT$39 billion (US$1.24 billion) after construction of three chemical plants is completed around the end of 2007, he said.
Lee repeated his view that the government should ease restrictions on investing in petrochemical plants in China to allow Taiwanese companies to take advantage of demand for raw materials.
Formosa Plastics Group is considering building a petrochemical project in China similar to its NT$652.8 billion venture in the west coast township of Mailiao in Yunlin County, which includes Taiwan's first privately owned oil refinery and naphtha crackers.
The government restricts investment in China because of concerns that companies there may lure business away from Taiwan or steal technology. The restrictions include a ban on building plants that produce ethylene, a raw material used to make plastics and textiles.
Formosa Plastics Corp shareholders yesterday approved proposals to invest NT$1.97 billion in expanding carbon fiber and nitrogen trifluoride production in Taiwan.
Formosa Plastics' annual capacity to produce carbon fiber, used for insulation, is expected to rise to 2,950 tonnes by December next year from 1,850 now, according to a report the company distributed to shareholders yesterday.
The company plans to double its annual capacity to produce nitrogen trifluoride -- a gas used in the manufacture of semiconductors and liquid-crystal displays -- to 400 tonnes by end of the year, according to the report.
RSS