News on 26 May

May 26, 2000, Friday

LENGTH: 620 words

HEADLINE: TPI planner optimistic over future

BYLINE: The Nation

BODY:
EFFECTIVE Planners Limited, a whollyowned subsidiary of Ferrier Hodgson, a leading accounting, financial restructuring and recovery firm, announced today that it is making solid progress in the drafting of a comprehensive rehabilitation plan for Thai Petrochemical Industry Public Company Limited (TPI).

Regarding the strictly financial aspects of the plan, Anthony J. Norman, managing director of Effective Planners, said: We are currently collecting preliminary data to review the financial model on which the present term sheet, previously agreed to by TPI and its creditors in February 1999, is based.

While we expect no changes to the core concepts of that term sheet, it is essential to compare the actual financial results for 1998 and 1999 against the projections for these periods that were used in the term sheet. The plans cash forecasting must be based on updated, empirical facts and realistic assumptions.

The business as usual aspect of preparing this plan does not imply a caretaker or strictly shortterm, focused observers role for Effective Planners. The planner has been intensively involved in reviewing and suggesting improvements to TPIs entire operations, including, most importantly, its production planning and coordination processes.

Barry Murphy, a director at Effective Planners, is currently acting as chairman of the management group of TPIs Rayong refinery and has 30 years experience in the international oil industry. He strictly oversees TPIs five operating divisions together with twelve supporting cost centres, including plant accounting, safety and security, Rayong personnel, engineering covering both maintenance and capital expenditures, support services, community services, TPIs technical school, environmental management and international standards, logistics including shipping and warehousing, and systems and structured development.

Murphy added that, We are focusing our attention on how to better utilise existing assets and improve margins by becoming less production oriented, and more focused on incorporating a precise and complete allocation of costs to products and divisions. By managing production quantities to match market demand, we do not end up with excess inventories in products where demand or producer pricing power is lacking.

Effective Planners petrochemical experts are now focusing their attention on five key areas to ensure that TPIs operations are cost competitive on a global basis. These comprise improving forecasting techniques for the demand of TPIs products, optimising plant production by sophisticated modelling tools and linking production to the demand forecast, introducing a rigorous economic justification for capital expenditures and reviewing management styles, including, in particular, corporate governance and potential decentralisation of control.

We also plan to look into the way TPI addresses the marketplace. At present, the company has approximately a dozen distribution agents for the domestic market, and a similar number for the export market, said Murphy. We have also studied the internal control systems related to inventory control and are satisfied that inventory is properly recorded and protected.

Murphy added that they have been impressed by the equipment and technical expertise of TPIs operations team. However, Effective Planners experts will recommend that considerable revisions be made to production planning and coordination procedures, which should lead to improvements in the companys cash flow

Norman added that a comprehensive TPI rehabilitation plan is expected to be submitted to creditors approximately one month before the courtmandated August 23 deadline this year.