Vinythai Plc, Thailand's second-largest producer of plastics for making pipes and fittings, yesterday denied a report that Malaysian energy giant Petronas was looking to swap assets.

"Vinythai has no information on the proposed transaction, and the company cannot comment on this news. The company has never been approached by any interested party on the plan as outlined in the news," Vinythai managing director Guenther Wilhelm Nadolny said in a statement to the Stock Exchange of Thailand.

It was reported on Thursday that Petronas was interested in selling sell two petrochemical plants to Vinythai in return for a stake in the Thai-listed plastics-maker.

Reuters quoted two sources familiar with the matter as saying that under the plan Thailand's second-largest maker of polyvinyl chloride (PVC) would issue shares to the Malaysia state oil giant

for the plants, a swap involving

assets with a combined estimated value of more than US$1 billion (Bt38.2 billion).

The likely tie-up is aimed at creating economies of scale needed to protect petrochemical margins which have been pinched by rising feedstock

costs due to sharply higher oil prices and falling plastic prices caused by dwindling Chinese imports, said a source.

"Basically, what would happen is Vinythai, the public company, would issue equity to Petronas in exchange for the assets," said a source, adding that Petronas could end up with about one-third of the listed company following the deal.

Vinythai is 48-per-cent controlled by Belgian drug and chemical company Solvay and 20-per-cent owned by PTT Chemical Plc, according to Vinythai's website, which was last updated at the end of February.

The sources said, however, that the plan might not materialise as it would depend on the result of a valuation report on the equity portion of the two petrochemical plants, Vinyl Chloride (M) Sdn Bhd in northeast Malaysia and Phu My Plastics & Chemical Company Ltd in Vietnam.

Meanwhile Vinythai said in a separate statement to the stock exchange that its bondholders had approved the granting of a waiver by permitting the distribution of a maximum Bt688-million cash dividend to shareholders for the firm's 2005 operations.