Phoenix, Siam Cement 'just good friends'

Phoenix, Siam Cement 'just good friends'

BANGKOK (Reuters): A top executive of Thailand's Phoenix Pulp & Paper Plc on Friday denied rumors of an imminent merger with Siam Cement Plc, saying the two were "just good friends".

Siam Cement, the country's biggest conglomerate, is one of Phoenix's best customers, the pulp firm's executives said.

Phoenix shares have risen sharply this week following comments by officials of Siam Cement that they had been considering buying a large number of shares in Phoenix for several months.

Phoenix jumped almost 14 percent on Friday to 43.50 baht after widespread speculation in the Thai media that a merger would be announced soon. The Thai benchmark composite SET index was up just over one percent on Friday.

But Phoenix officials told Reuters there had been no formal discussion on a merger with Siam Cement.

"Siam Cement has not told us anything," Phoenix Executive Director Vashi Purswani said in an interview.

"If investors want to sell the shares, it is their decision," he said. "Siam Cement is our best customer and we have a very good relationship with them," he said. "We are just good friends.

"The company has no role in this (acquisition deal). The decision is up to the shareholders," he said. "As the management we can not say anything."

Phoenix is Thailand's largest producer of pulp for sale and had a turnover of 3.75 billion baht in 1999 resulting in a net profit of 702 million baht.

In the first nine months of 2000, Phoenix turned in a net profit of 1.64 billion baht.

Barra's Estimate Directory shows an average market average consensus of a net profit of 2.08 billion baht in 2000 and 2.13 million in 2001.

Based in northeastern Thailand, Phoenix produces about 200,000 tons per year of pulp from bamboo, eucalyptus, and kenaf. It exports about 50 percent of its product to China, Indonesia, Europe, Malaysia and the Philippines.

The company sold 36 percent of its pulp to Siam Cement last year, representing about 70 percent of Phoenix's domestic sales, Purswani said.

Chief Finance Officer A.S. Banthis said he did not expect problems dealing with Siam Cement if there were to be an acquisition.

"There may be a slight adjustment in working cultures, that is all. We are professional managers," he said. "Last year they wanted to sell us their paper business. It's funny how things change," he added.

Purswani said the company expected a strong performance in 2000 and in 2001 despite a downward trend in global pulp prices.

"In 2000 we have topped everything, maximum sales value wise and maximum profit," he said.

Banthis said the company's fourth quarter results could be extrapolated from the results of the first three quarters.