TRIS Rating Co., Ltd. has placed the CreditAlert with “negative” implication to the company rating of Bangkok Mass Transit System PLC (BTSC). At the same time, TRIS Rating has also placed a “developing” CreditAlert implication to the ratings of BTSC’s senior debentures. The rating action follows the announcement of BTS Group Holdings PLC (BTSG), BTSC’s shareholder with a 97.5% stake, regarding the resolution of BTSG’s Board of Director to sell the net farebox revenue of the Core BTS Skytrain System to the Infrastructure Fund (IFF). The Core BTS Skytrain System is operated by BTSC under the concession with the remaining period of 17 years. The IFF establishment will be subject to (i) approval by BTSG’s shareholders, (ii) the consent from BTSC’s bondholders on various amendments, and (iii) a minimum sale price of Bt50,000 million. BTSC will place a portion of the proceeds from the IFF transaction as security for the full amount of principal and future interest payable under the terms of BTSC’s existing debentures. The remaining will be distributed to BTSG, its parent company, to finance the 33.33% investment in IFF and to be reserved for future investment.
BTSC’s business includes the Core BTS Skytrain System, the operation and maintenance (O&M) services for the BTS skytrain extension, and the media business operated by VGI Global Media PLC. For the first half of fiscal year 2012/2013 (April - September 2012), contribution from mass transit business constituted 55% of total revenue while O&M services and media business contributed 12% and 33%, respectively. In terms of earnings before interest, tax, depreciation, and amortization (EBITDA), contribution from mass transit and O&M services was 73% and media business accounted for 26%. For the post IFF transaction, BTSC’s remaining operation will be O&M services and media business. Going forward, BTSC will continue to be BTSG’s strategic subsidiary to operate and possess the core expertise for the mass transit business of the group. BTSG is expected to provide the full support to BTSC’s operation as the key strength to bid for new electric train. Hence, although BTSC’s credit profile will be impacted by the reduction of cash flow from mass transit business, its company rating will likely be the same as BTSG’s, its parent company.
The “developing” implication for BTSC’s issue ratings is based on the company’s intention to immediately provide a reserve or security package securing the full amount of principal and future interest payable under the terms of its debentures. The company is considering a provision of bank guarantee for the outstanding debentures. Hence, upon the satisfactory commitment, the issue ratings will be based on the bank’s credit quality.
The CreditAlert announcements for BTSC’s ratings will be resolved once the IFF transaction and the security package are finalized. — End
Company Rating: A CREDITALERT DESIGNATION: Negative Issue Ratings: BTS138A: Bt2,500 million senior debentures due 2013 A BTS148A: Bt4,000 million senior debentures due 2014 A BTS158A: Bt1,500 million senior debentures due 2015 A BTS168A: Bt1,500 million senior debentures due 2016 A CREDITALERT DESIGNATION: Developing
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