Guangdong Zhenrong Energy has sweetened its takeover offer for debt-laden Titan Petrochemicals Group in a bid to fend off a rival offer backed by United States private equity firm Warburg Pincus, a major creditor of Titan.
In place of its offer made in August to buy 90 per cent of Titan through a subscription of new shares for HK$175 million, Zhenrong Energy, a unit of state-owned commodities trader Zhuhai Zhenrong, has offered to buy all of Titan's existing 7.8 billion shares for HK$19.55 million.
While the per share offer price is the same, the new offer gives Titan shareholders an opportunity to cash out earlier.
Zhenrong Energy has also offered to inject HK$928.2 million into Titan in exchange for two batches of preference shares.
The new offer means existing shareholders' stake would be diluted to 10 per cent instead of 4.2 per cent as in the original offer.
Warburg and SouthernPec, a Guangzhou-based rival of Titan, proposed in August to buy 88 per cent of Titan through a purchase of new shares for HK$208 million cash. They also offered to eliminate HK$382 million worth of creditor claims against Titan by an associate firm of Warburg, by swapping them for Titan shares.
For Titan's creditors, Zhenrong Energy is offering that Titan repay them in five years, with 2 per cent interest. This compares with the previous offer of a seven-year repayment period with a 22 per cent discount off the face value, or zero discount if the debt is repaid over 10 years.
Meanwhile, although the liquidators of Titan's fuel storage unit have agreed on Warburg's associate firm buying the storage assets, Titan said Zhenrong Energy was in talks with Warburg to buy the assets and inject them into Titan.
Zhenrong Energy also wants the Warburg associate to drop legal actions against Titan and its directors over alleged execution of unauthorised debt guarantees.