Alujain Sells Minority Stake in Its Subsidiary NATPET for $500 Million

Saudi Arabia’s Alujain Corp. has announced signing of an agreement to sell a minority stake of its subsidiary National Petrochemical Industrial Co (NATPET) to Basell International Holdings, a subsidiary of New York Stock Exchange-listed LyondellBasell Industries, for nearly $500 million.

The agreement covers selling a 35% stake, representing 37.45 million shares in NATPET’s capital, to Basell International, as part of a comprehensive joint venture (JV) arrangement, the company said. Alujain’s ownership in NATPET at the date of signing this agreement stands at 98.7% of the total shares of NATPET.

The agreement is subject to preconditions and warranties related to amendments to the structure of NATPET and the new project company and obtaining the necessary approvals from the relevant authorities as per the terms of the agreement.

NATPET is a closed joint stock company with its head office and propylene/polypropylene Complex in Yanbu Industrial City in Saudi Arabia to produce propylene/polypropylene and its derivatives, having a nameplate production capacity of 400,000 tons per year of polypropylene. The authorised and paid-up capital comprised 107 million shares of $2.67 per share and the book value of the company stands at $670 million as of 30 November 2023.

Meeting Financial Obligations

The transaction aims to achieve the strategic objectives of the two partners, and enable Alujain to deal optimally with its current and future financial obligations.

Alujain also said that the JV included Basell International entering into a shareholding partnership with Alujain in NATPET with a share of 35% of the company’s capital. Basell International will invest and own 35% of the new project company capital.

The cost of its capital investments is estimated at approximately $2 billion, after completing the current detailed engineering design (FEED) phase and evaluating the economic feasibility study for the new project, and obtaining the necessary approvals to invest in the new project, which will achieve the strategic goals of the two partners.

The deal also resulted in the signing of a number of agreements, and they include purchasing a share representing 35% of the shares of NATPET, a shareholding agreement between the two partners, a marketing and offtake agreement, an allocation of volumes agreement, a project management agreement, as well as a cost sharing and reimbursement agreement.

It is expected that these agreements will contribute to achieving the goals of the energy sector within the Kingdom’s Vision 2030 by maximising the added value to the national economy achieved from the sector.

Upon completion of the detailed design phase, Alujain will receive compensation proportional to what was invested in the new project, in addition to a development bonus, once final approvals are obtained for investment in the new project.

Revenues and Net Profits

While the revenues of NAPTET were $310 million in 2020, $540 million in 2021 and $500 million in 2022, the net profits of the company for the same period were $109.85 million, $136.38 million and $69.59 million respectively.