TRIS Rating Co., Ltd. has affirmed the rating of Ratchaburi Electricity Generating Holding PLC (RATCH) at "A+", which reflects a stable dividend from RATCH's wholly-owned operating subsidiary, Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN), its moderately conservative investment policy and the strong relationship with its major shareholder, Electricity Generating Authority of Thailand (EGAT). However, these strengths are partially offset by a structural subordination of RATCH's creditors and uncertainty about the deregulation of the power industry.
At the same time, TRIS Rating has also affirmed the rating of RATCHGEN at "AA-", which reflects its stable cash flow from well-designed project structures, state-of-the-art power plants, and the sponsors' and operator's long-standing experience in the power sector. The rating incorporates the power plant operation risk and uncertainty about the planned deregulation of the power industry.
TRIS Rating reported that RATCH and RATCHGEN were established in 2000 to purchase the Ratchaburi power plants from EGAT. The gas-fired power plants are located in Ratchaburi province. RATCH holds 100% of RATCHGEN, the largest private power producer in Thailand with total installed capacity of 3,645 MW, which represents 14% of Thailand's total installed capacity and 34% of the private sector's installed capacity as of November 2003. RATCH's stable dividends are derived from RATCHGEN's consistent cash flow. RATCH has had EGAT as its major shareholder, holding a 45% stake as of March 2004. EGAT operates RATCHGEN's power plant under an operation and maintenance agreement (OMA) and is RATCHGEN's sole customer under power purchase agreements (PPAs). In addition, EGAT has a minimum gas off-take obligation under a master gas sales agreement (MGSA) with PTT PLC (PTT). The 25-year PPAs between EGAT and RATCHGEN are well structured to significantly protect RATCHGEN from fluctuations in power demand and supply. The pay-if-available payment structure of the PPAs provides dependable cash flow to RATCHGEN, while the revenue adjustment mechanism limits foreign exchange rate risk and inflation rate risk. A 25-year gas sale agreement (GSA) with PTT and the structure of the energy payments in the PPAs limit RATCH's fuel risk.
TRIS Rating said although RATCH has a broad policy to invest in power generating and related businesses in Thailand and region, its priorities for future investment will be the acquisition of existing power projects holding long-term PPAs with EGAT, followed by brownfield projects and greenfield projects. In November 2003, RATCH invested Bt2,100 million for 37.5% ownership in Tri Energy Co., Ltd. (TECO), a 700 MW gas-fired combined cycle power plant in Ratchaburi province. RATCH also invested Bt416 million to acquire a 25% stake in Ratchaburi Power Co., Ltd. (RPC) in February 2004. RPC is a two-block combined cycle power plant with total generating capacity of 1,400 MW and is scheduled to commence operations in 2008.
RATCHGEN's 2003 operation was satisfactory. It could maintain its equivalent availability factor (EAF) of the thermal units at 87% and combined cycle units at 86% in 2003. Its funds from operations increased from Bt6,694 million to Bt8,034 million because 2003 was the first full year of operation for the three combined cycle blocks. RATCHGEN's total debt to capitalization in 2003 remained at 64% and its debt service coverage ratio without reserve accounts and after net changes in working capital was at 3.4 times.TRIS Rating said that EGAT is the sole power purchaser of RATCHGEN, and under the PPAs, it has exclusive authority to schedule and dispatch electricity generated from RATCHGEN through its transmission grid. Thus, RATCHGEN's credit strength is constrained by EGAT's creditworthiness. EGAT is now 100% owned by the government, however, its organization is undergoing restructuring. TRIS Rating will closely monitor the impact of EGAT's privatization on RATCH's and RATCHGEN's credit quality.-- End
Ratchaburi Electricity Generating Holding PLC (RATCH)Company Rating: Affirmed at A+Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN)Company Rating: Affirmed at AA-
At the same time, TRIS Rating has also affirmed the rating of RATCHGEN at "AA-", which reflects its stable cash flow from well-designed project structures, state-of-the-art power plants, and the sponsors' and operator's long-standing experience in the power sector. The rating incorporates the power plant operation risk and uncertainty about the planned deregulation of the power industry.
TRIS Rating reported that RATCH and RATCHGEN were established in 2000 to purchase the Ratchaburi power plants from EGAT. The gas-fired power plants are located in Ratchaburi province. RATCH holds 100% of RATCHGEN, the largest private power producer in Thailand with total installed capacity of 3,645 MW, which represents 14% of Thailand's total installed capacity and 34% of the private sector's installed capacity as of November 2003. RATCH's stable dividends are derived from RATCHGEN's consistent cash flow. RATCH has had EGAT as its major shareholder, holding a 45% stake as of March 2004. EGAT operates RATCHGEN's power plant under an operation and maintenance agreement (OMA) and is RATCHGEN's sole customer under power purchase agreements (PPAs). In addition, EGAT has a minimum gas off-take obligation under a master gas sales agreement (MGSA) with PTT PLC (PTT). The 25-year PPAs between EGAT and RATCHGEN are well structured to significantly protect RATCHGEN from fluctuations in power demand and supply. The pay-if-available payment structure of the PPAs provides dependable cash flow to RATCHGEN, while the revenue adjustment mechanism limits foreign exchange rate risk and inflation rate risk. A 25-year gas sale agreement (GSA) with PTT and the structure of the energy payments in the PPAs limit RATCH's fuel risk.
TRIS Rating said although RATCH has a broad policy to invest in power generating and related businesses in Thailand and region, its priorities for future investment will be the acquisition of existing power projects holding long-term PPAs with EGAT, followed by brownfield projects and greenfield projects. In November 2003, RATCH invested Bt2,100 million for 37.5% ownership in Tri Energy Co., Ltd. (TECO), a 700 MW gas-fired combined cycle power plant in Ratchaburi province. RATCH also invested Bt416 million to acquire a 25% stake in Ratchaburi Power Co., Ltd. (RPC) in February 2004. RPC is a two-block combined cycle power plant with total generating capacity of 1,400 MW and is scheduled to commence operations in 2008.
RATCHGEN's 2003 operation was satisfactory. It could maintain its equivalent availability factor (EAF) of the thermal units at 87% and combined cycle units at 86% in 2003. Its funds from operations increased from Bt6,694 million to Bt8,034 million because 2003 was the first full year of operation for the three combined cycle blocks. RATCHGEN's total debt to capitalization in 2003 remained at 64% and its debt service coverage ratio without reserve accounts and after net changes in working capital was at 3.4 times.TRIS Rating said that EGAT is the sole power purchaser of RATCHGEN, and under the PPAs, it has exclusive authority to schedule and dispatch electricity generated from RATCHGEN through its transmission grid. Thus, RATCHGEN's credit strength is constrained by EGAT's creditworthiness. EGAT is now 100% owned by the government, however, its organization is undergoing restructuring. TRIS Rating will closely monitor the impact of EGAT's privatization on RATCH's and RATCHGEN's credit quality.-- End
Ratchaburi Electricity Generating Holding PLC (RATCH)Company Rating: Affirmed at A+Ratchaburi Electricity Generating Co., Ltd. (RATCHGEN)Company Rating: Affirmed at AA-