TRIS Rating Co., Ltd. has affirmed the company rating of Glow SPP PLC and the ratings of its debentures at "A-", taking into consideration GLOW SPP's prospective acquisition of Glow Co., Ltd. GLOW SPP plans to acquire 100% of Glow's shares from Tractebel Electricity & Gas International (Tractebel EGI), which is also the parent of GLOW SPP. This acquisition will be funded partly by debt, partly by equity and partly by internal cash. The ratings reflect the company's stable cash flow from long-term Power Purchase Agreements (PPAs); the diversification of its fuel types; the dividend contribution expected from two projects under Glow whereby the additional debt incurred for the acquisition will be within its current debt service ability; and the experienced management team put in place by its parent, Tractebel EGI. The ratings also incorporate power plant operation risk and uncertainty about the planned deregulation of the power industry. While the "stable" outlook reflects GLOW SPP's reliable cash flow from its long-term PPAs with EGAT and industrial customers. The company is expected to continue to achieve its operational performance targets while maintaining an acceptable financial position.
TRIS Rating reported that GLOW SPP group, consisting of Glow SPP 2 Co., Ltd. and Glow SPP 3 Co., Ltd., is the largest small power producer (SPP) in Thailand. Using cogeneration technology, GLOW SPP supplies electricity, steam and treated water to manufacturers in the Map Ta Phut Industrial Estate and sells electricity to the Electricity Generating Authority of Thailand (EGAT). GLOW SPP and its subsidiaries, GLOW SPP2 and GLOW SPP3, currently have total generating capacity of 814 MW of electricity, 770 tons per hour (t/h) of steam, 2,000 cubic meters per hour (cu.m/h) of clarified water and 660 cu.m/h of demineralized water.
TRIS Rating said that according to the GLOW SPP group's reorganization plan, GLOW SPP plans to purchase 100% of Glow's shares from the affiliate of Tractebel EGI, for approximately Bt7,500 million. Funding for this purchase will be sourced from internal cash, equity and additional borrowing. After the acquisition, the power generating business of Tractebel EGI in Thailand will be solely monitored through GLOW SPP, whose portfolio will include another two completed electricity generating projects (Glow IPP Co., Ltd.-- an independent power producer 95% owned by Glow, and Glow SPP1 Co., Ltd.-- an SPP wholly owned by Glow) with totaling 860 MW designed capacity. Consequently, GLOW SPP group will have total generating capacity of 1,674 MW of electricity, 900 t/h of steam, 2,000 cu.m/h of clarified water and 810 cu.m/h of demineralized water. Besides the initial investment, both projects are unlikely to incur any additional burden to GLOW SPP in the future as they are financed under the project finance scheme. On the other hand, GLOW SPP can expect dividend contributions from both projects under the conditions of their project financing agreements. The additional debt required to fund this acquisition will be structured, taking into consideration GLOW SPP's current debt service ability, and the repayment will be made from cash in excess of its existing debt service obligations.
The stability of GLOW SPP's cash flow is expected to continue strong, even after the acquisition, as a result of 21 to 25 years PPAs with EGAT, and contracts ranging from three to 17 years with individual industrial clients. The PPAs are designed to cover fixed costs, including investment costs, through capacity payments and cover variable costs, such as fuel and maintenance costs, through energy payments. Capacity payments partly mitigate the foreign exchange rate risk by adjusting the contract rate to reflect the current exchange rate. In 2003, GLOW SPP's operating performance was satisfactory. The company was able to maintain its equivalent availability factor (EAF) at 95%. Total outages in 2003 improved to 44 days compared with 52 days in 2002, and the average heat rate was slightly better in 2003 at 9,098 British Thermal Units per kilowatt hour equivalent (BTU/kWh eq), improving from 9,169 BTU/kWh eq in 2002. However, its operating income as a percentage of sales decreased from 34.1% in 2002 to 29.5% in 2003 mainly due to refinancing expenses in the second half of 2003. This ratio declined further, to 28.5% in the first half of 2004, as a result of rising gas and coal prices, TRIS Rating said. - End
Glow SPP PLC Company Rating: Affirmed at A- Issue Ratings: COCO#1: Bt2,200 million guaranteed debentures due 2005 Affirmed at A- GLOW089A: Bt6,500 million guaranteed debentures due 2008 Affirmed at A- GLOW09OA: Bt2,310 million guaranteed debentures due 2009 Affirmed at A- GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Affirmed at A- Rating Outlook: Stable
TRIS Rating reported that GLOW SPP group, consisting of Glow SPP 2 Co., Ltd. and Glow SPP 3 Co., Ltd., is the largest small power producer (SPP) in Thailand. Using cogeneration technology, GLOW SPP supplies electricity, steam and treated water to manufacturers in the Map Ta Phut Industrial Estate and sells electricity to the Electricity Generating Authority of Thailand (EGAT). GLOW SPP and its subsidiaries, GLOW SPP2 and GLOW SPP3, currently have total generating capacity of 814 MW of electricity, 770 tons per hour (t/h) of steam, 2,000 cubic meters per hour (cu.m/h) of clarified water and 660 cu.m/h of demineralized water.
TRIS Rating said that according to the GLOW SPP group's reorganization plan, GLOW SPP plans to purchase 100% of Glow's shares from the affiliate of Tractebel EGI, for approximately Bt7,500 million. Funding for this purchase will be sourced from internal cash, equity and additional borrowing. After the acquisition, the power generating business of Tractebel EGI in Thailand will be solely monitored through GLOW SPP, whose portfolio will include another two completed electricity generating projects (Glow IPP Co., Ltd.-- an independent power producer 95% owned by Glow, and Glow SPP1 Co., Ltd.-- an SPP wholly owned by Glow) with totaling 860 MW designed capacity. Consequently, GLOW SPP group will have total generating capacity of 1,674 MW of electricity, 900 t/h of steam, 2,000 cu.m/h of clarified water and 810 cu.m/h of demineralized water. Besides the initial investment, both projects are unlikely to incur any additional burden to GLOW SPP in the future as they are financed under the project finance scheme. On the other hand, GLOW SPP can expect dividend contributions from both projects under the conditions of their project financing agreements. The additional debt required to fund this acquisition will be structured, taking into consideration GLOW SPP's current debt service ability, and the repayment will be made from cash in excess of its existing debt service obligations.
The stability of GLOW SPP's cash flow is expected to continue strong, even after the acquisition, as a result of 21 to 25 years PPAs with EGAT, and contracts ranging from three to 17 years with individual industrial clients. The PPAs are designed to cover fixed costs, including investment costs, through capacity payments and cover variable costs, such as fuel and maintenance costs, through energy payments. Capacity payments partly mitigate the foreign exchange rate risk by adjusting the contract rate to reflect the current exchange rate. In 2003, GLOW SPP's operating performance was satisfactory. The company was able to maintain its equivalent availability factor (EAF) at 95%. Total outages in 2003 improved to 44 days compared with 52 days in 2002, and the average heat rate was slightly better in 2003 at 9,098 British Thermal Units per kilowatt hour equivalent (BTU/kWh eq), improving from 9,169 BTU/kWh eq in 2002. However, its operating income as a percentage of sales decreased from 34.1% in 2002 to 29.5% in 2003 mainly due to refinancing expenses in the second half of 2003. This ratio declined further, to 28.5% in the first half of 2004, as a result of rising gas and coal prices, TRIS Rating said. - End
Glow SPP PLC Company Rating: Affirmed at A- Issue Ratings: COCO#1: Bt2,200 million guaranteed debentures due 2005 Affirmed at A- GLOW089A: Bt6,500 million guaranteed debentures due 2008 Affirmed at A- GLOW09OA: Bt2,310 million guaranteed debentures due 2009 Affirmed at A- GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Affirmed at A- Rating Outlook: Stable