TRIS Rating has placed the company and issue ratings of Property Perfect PLC (PF) on CreditAlert with a “developing” implication. The rating action follows the company’s announcement on 16 June 2014 that it plans to acquire Thai Property PLC (TPROP). PF intends to make a tender offer for all of the outstanding shares of TPROP, using shares swap or cash payment. If PF successfully acquires all of TPROP’s shares, PF will have a controlling stake in Grande Asset Hotels and Property PLC (GRAND). TPROP currently owns 40.62% of GRAND and is the controlling shareholder. After PF acquires TPROP, PF must also make a tender offer for all of the outstanding shares of GRAND.
If the tender offer and acquisition of TPROP is successful, PF’s asset base will increase by around Bt10,000 million. In addition, its recurring income base will increase to around Bt1,000-Bt1,500 million per annum, or around 10% of its current revenue level. PF’s capital structure will change as a result of the acquisition. However, the final capital structure will depend on the type of funding used to finance the acquisition. Other benefits from the acquisition are still uncertain and remain to be seen.
Under the terms of this transaction, PF plans to raise Bt4,777 million in new equity capital by issuing 4,777 million shares, with the par value of Bt1, at the fixed price of Bt1.14 per share. PF will allot around 1,600 million shares to TPROP’s shareholders at the swap ratio of one share of TPROP to 0.5 shares of PF, or a price of Bt0.57 per share of TPROP. In addition, PF will allot 3,162 million shares to GRAND’s shareholders at the swap ratio of one share of GRAND to 1.149123 shares of PF, or a price of Bt1.31 per share of GRAND. The remaining shares will be reserved for holders of PF’s warrants (PF-W3). PF expects to complete these transactions by the end of 2014. These transactions are subject to shareholders’ approval at an extraordinary general meeting (EGM) of PF’s shareholders on 29 July 2014. The acquisition must be approved by a vote of not less than three-fourths of PF’s shareholders attending the meeting and having the voting rights. In addition, the tender offer for TPROP may be cancelled if the offer is not accepted by more than 75% of TPROP’s shareholders holding issued and paid-up shares.
It is still uncertain if the acquisitions will be completed as planned. TRIS Rating will closely monitor the transactions and resolve the CreditAlert once the transactions have been finalized and a thorough analysis has been conducted. Any change in the rating or the outlook of PF will depend not only on the completion of this acquisition but also on PF’s overall operating performance and its post-acquisition capital structure.
TRIS Rating has assigned PF’s company and senior unsecured debenture ratings at “BB+” and has assigned the company’s partially guaranteed debenture ratings at “BBB”.
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