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FTC approves Texas PET plant joint venture: Indorama

Houston — The US Federal Trade Commission has approved a joint venture's acquisition of an unfinished polyethylene terephthalate and purified terephthalic acid complex in Texas, Indorama Ventures said this week.

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That approval allows Thailand-based Indorama Ventures, the world's largest PET producer, Mexico's Alpek and Taiwan's Far Eastern New Century to move ahead to finish construction, commissioning and startup of the Corpus Christi complex where work has been largely idle for more than a year. The three companies struck a deal in March to buy the complex for $1.125 billion in cash and capital contributions from bankrupt M&G Chemicals, the Luxembourg, Belgium-based subsidiary of Italy's Mossi Ghisolfi that oversaw US subsidiaries.

"The FTC's regulatory clearance represents an important milestone and a giant step toward serving the growing market needs of recyclable PET for many years to come," Indorama Ventures Group CEO Aloke Lohia said in a statement on Monday. "With the approvals in place, we look forward to assist and fast track the construction."

Indorama and its partners have been waiting for the FTC's approval to resume work on the 1.1 million mt/year PET plant, which will be the world's largest, and its associated 1.3 million mt/year PTA plant. Dilip Kumar Agarwal, CEO of Indorama's feedstock and PET business, said in August that even if FTC approval came before the end of 2018, the companies did not expect the PET plant to start up before late 2019 or early 2020, and the PTA plant startup would come a year after that.

PTA is a feedstock for PET, which is used to make plastic soda and water bottles as well as polyester fiber and fabric.

Under the deal, the three companies in the joint venture will each receive one-third of the capacity of PET and PTA produced, and each will procure raw materials and sell output independent of each other.

Indorama also is commissioning a revamped 440,000 mt/year ethane-fed steam cracker in Louisiana with full production expected next year. Indorama acquired the cracker in 2015 for $175 million, after it had been idle since February 2001, when former owner Equistar Chemicals, a subsidiary of LyondellBasell, mothballed it in 2001 for economic reasons. Indorama aims to use most output from the cracker for its ethylene oxide and ethylene glycol production, the company has said.

According to bankruptcy court filings, delays and cost overruns at the Corpus Christi project drained M&G Chemical's finances from the Americas and from parent Mossi Ghisolfi. The parent group sought bankruptcy protection in Italy in October, and M&G Chemicals did the same in US bankruptcy court in Delaware soon thereafter.

In February Far Eastern won bankruptcy court approval to buy M&G's 360,000 mt/year PET plant in West Virginia and an Ohio research center for $33.5 million, giving the company its entrance into the US PET market. The plant had closed in November last year amid M&G's financial issues. Far Eastern began restarting the West Virginia plant in August this year.

Alpek, which had been a major PTA supplier for M&G's plants in Mexico and Brazil, had supply rights to nearly half of the PET output from the Corpus Christi plant before M&G's financial woes halted construction. Alpek later signed a a deal to provide up to $60 million in secured financing to the M&G subsidiary that runs the Altamira, Mexico, plant.

Indorama, meanwhile, entered Brazil's PET market with its purchase of M&G's Brazilian assets, including the 550,000 mt/year PET plant in Ipojuca, for an undisclosed amount. Those Mexico and Brazil plants were not part of M&G's bankruptcy.

Indorama also announced on Monday that it has acquired Custom Polymers PET LLC's 31,000 mt/year PET recycling facility in Alabama. The facility is near Indorama's AlphaPet, polyester manufacturing plant in the state.

Indorama said the deal, expected to close in early 2019, will secure supply of recycled PET, including food-grade pellets, to serve North American customers and meet growing demand for more sustainable packaging needs.

--Kristen Hays, kristen.hays@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com