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MOSCOW (MRC) -- Inter Pipeline Ltd's
ambitious petrochemical plant was meant to unlock new markets, instead it has
left the Canadian company battling cost overruns and vulnerable to a hostile
USD5.64 billion takeover from Brookfield Infrastructure Partners, said Hydrocarbonprocessing.
Some
investors have ruled out a rival bid to Monday's offer for the oil and gas
transportation company, and expect Brookfield to snap up Inter just before its
newest asset, the Heartland Petrochemical Complex, comes into
service.
The CD4 billion Heartland plant near Edmonton, Alberta, is
Inter's first petrochemical project and its largest ever capital investment. It
is due for completion early next year, several months behind schedule and CD500
million over budget as a result of the COVID-19 pandemic.
Heartland will
boost Inter's adjusted annual EBITDA, which are earnings before certain items
are taken into account, by CD500 million or roughly 50% from 2020 levels. But
the project's cost is weighing on the company's balance sheet and a lack of
information on sales contracts has spooked many investors.
The pandemic
also stalled Inter's search for a joint venture partner for Heartland, leaving
the company exposed to cost and construction risks. That has hurt its shares,
some investors say, making it an easy takeover target.
"If Inter could
have brought a partner in, that could have protected them from this scenario,"
said Ryan Bushell, president of Newhaven Asset Management, which owns shares in
both companies. "Inter is stuck between a rock and a hard place. They're not
going to be able to drum up a better offer and Brookfield knows that. They're
buying Heartland basically for free, with a fully running
company."
Bushell said he would prefer Heartland to remain an Inter asset
so the company can realize the full value of the project.
As per MRC,
Inter Pipeline Ltd. announced that its
board of directors has authorized the construction of a world-scale integrated
propane dehydrogenation (PDH) and polypropylene (PP) plant. The facilities,
collectively referred to as the Heartland Petrochemical Complex, are estimated
to cost USD3.5 B in aggregate and will be located in Strathcona County, Alberta
near Inter Pipeline’s Redwater Olefinic Fractionator.
According to MRC's
ScanPlast report,
Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2%
year on year. Only shipments of low density polyethylene (LDPE) and high density
polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to
the Russian market reached 1 240,000 tonnes in 2020 (calculated using the
formula: production, minus exports, plus imports, excluding producers'
inventories as of 1 January, 2020). Supply of exclusively PP random copolymer
increased. |
