Fitch Affirms TPN's Ratings After Proposed Acquisition of Parent

Fitch Ratings-Jakarta/Singapore-21 July 2010: Fitch Ratings has today affirmed Indonesia-based PT Titan Petrokimia Nusantara's (TPN) National Long-Term rating at 'A+(idn)' with a Stable Outlook. This follows the announcement by Honam Petrochemical Corporation (Honam) -- the flagship company of Korea's Lotte Group's petrochemical business -- that it plans to acquire Malaysia-based Titan Chemical Corp. Bhd. (Titan Chemicals), TPN's ultimate parent. At the same time, Fitch has also affirmed the National rating of 'A+(idn)' for TPN's IDR73bn rupiah bond and IDR200bn Islamic bond, due June 2015.

TPN's 'A+(idn)' National Long-Term rating already incorporates a two-notch uplift from its stand-alone rating --given the operational links with, and ownership and management control by Titan Chemicals which has a 90.4% beneficial ownership in TPN. Fitch believes that Titan Chemicals' credit profile may be enhanced by the proposed acquisition given the operational and financial strengths of Honam. However, the agency also believes that the proposed transaction will not further enhance the linkage between TPN and Titan Chemicals -- and therefore continues to maintain the two-notch uplift.

The company's 'A+(idn)' National Long-Term rating with Stable Outlook is based on Fitch's expectation that the company can maintain a financial profile appropriate for its rating through an expected upcoming downturn in the petrochemical industry in 2010-2011. Nevertheless, the agency may consider a negative rating action in the event TPN has a sustained and weak operating performance, and/or if there is evidence of reduced integration with Titan Chemicals.

TPN is one of the largest polyethylene producers in Indonesia with a total production capacity of 450 kilotonnes (KT) per annum. In 2009, TPN's production volume reached 293KT with revenue and EBITDAR generation of USD380m and USD51m respectively.

Applicable Criteria available on Fitch's website at www.fitchratings.com: "Corporate Rating Methodology", dated 24 November 2009; and "Parent and Subsidiary Rating Linkage", dated 14 July 2010.

Fitch has made major improvements to its credit research on EMEA and AsiaPac corporates. To view these improvements, visit our 'Clear Thinking' web page at http://clearthinking.fitchratings.co.uk/Index.html

Contacts: Jessie Wahab, Jakarta, +6221 526 7949/ Jessie.wahab@fitchratings.com; Buddhika Piyasena, Singapore, +65 6796 7223/ buddhika.piyasena@fitchratings.com.