TRIS Rating has placed the company and issue ratings of True Corporation PLC (TRUE) on CreditAlert with “positive” implication. The rating action follows TRUE’s announced plan to raise Bt65 billion in equity. The plan is expected to help strengthen the company’s financial profile and improve business flexibility.
On 9 June 2014, TRUE’s Board of Directors approved the issuance of 10,077.7 million new shares at Bt6.45 per share, potentially raising the company’s equity by Bt65 billion. About 56% of the new shares will be allocated to existing shareholders, while the remaining 44% will be offered to China Mobile International Holdings Limited (China Mobile), the world largest mobile operator by subscribers. If all the shares are fully and proportionately subscribed, China Mobile will hold 18% stake in TRUE. CP Group’s holding stake in TRUE will decline from 60% to 49%.
TRIS Rating estimated that if most of the proceeds are used to pay down debts, TRUE’s total debts would be reduced by almost half. TRIS Rating considers TRUE’s total debts to include the present value of committed payments to the infrastructure fund. TRUE’s debt to capitalization ratio is expected to improve to 55%, from 94% at the end of March 2014. The debt to EBITDA (earnings before interest, tax, depreciation, and amortization) ratio is expected to decline to 3.5 times from 7 times. TRIS Rating views that TRUE’s stronger capital structure will help reduce interest costs and covenant concerns, as well as increase business competitiveness and flexibility. However, strategic collaboration with China Mobile will likely take time to materialize.
TRIS Rating will fully evaluate TRUE’s credit profile and take actions on ratings or outlook after the recap plan is complete. TRUE’s outlook is likely to be revised upward. However, TRUE’s rating upgrade will be considered together with the level of improvement in operating performance and the sustainability of the new capital structure.
TRIS Rating Co., Ltd./www.trisrating.com Contact: santaya@trisrating.com, Tel: 0-2231-3011 ext 500/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand Copyright 2014, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at http://www.trisrating.com/en/rating_information/rating_criteria.html.