TRIS Rating Co., Ltd. has affirmed the rating of Bt850 million senior secured debentures (PRK081A) of Premier Resort Krabi Co., Ltd. (PRK) at "BB+" and has changed the rating outlook to "stable" from "negative". The rating continues to reflect PRK's non-diversified source of cash flow and weak financial profile. The rating also takes into consideration the seasonal nature of the hotel industry, which is also highly sensitive to external factors. However, the rating is supported by PRK's high quality resort property. Moreover, the issue rating is enhanced by secured collateral and provisions that protect the company's cash flow for the debentureholders.
The "stable" outlook is based on the expectation that PRK will restore its operating performance back to normal and will be able to maintain its competitiveness. If PRK aggressively invests in other new businesses or assets that further weaken its financial profile, the rating or outlook may be revised.
TRIS Rating reported that PRK was founded in 1990 and has operated a 104-room high-end resort hotel, Rayavadee, in Krabi since 1993. The company's current shareholders are the Phongsathorn and Osathanugrah families (50.9%), Premier Fission Capital Co., Ltd. (22.8%), and Sea Harrier Co., Ltd. (26.3%). In May 2005, PRK increased its capital from Bt262 million to Bt329 million by issuing 6.67 million preferred shares to the Tsunami Recovery Fund. Rayavadee is in a unique and remarkable area on Pra Nang peninsula in Krabi, and is surrounded by towering limestone cliffs and beaches of three national parks. The hotel is managed by PRK's in-house management team, including new top managers who joined the hotel at the end of 2004 and have extensive experience in operating hotels in international markets.
In 2005, Rayavadee's performance was weak due mainly to the impact of the December 2004 tsunami. Revenue per available room (RevPar) dropped to Bt2,248 per night in 2005 from the range of Bt4,700 to Bt5,800 per night during the previous five years due mainly to a significant drop in occupancy rate (OR). The hotel's OR decreased to 15.9% in 2005 from 31.1% in 2004, while its average room rate (ARR) declined to Bt14,118 per night in 2005 from Bt18,371 per night in 2004. To diversify its sources of income, in April 2005, Raya Heritage Co., Ltd., 99.4% owned by PRK, bought Tamarind Village, a 40-room boutique hotel in Chiang Mai. The company plans to upgrade the hotel to be a luxury hotel. Though Tamarind Village is expected to make a full-year contribution in 2006, the contribution will be insignificant.
As Rayavadee contributes most of PRK's cash flow, the sharp decline in occupancy rate significantly impairs the company's financial profile. In 2005, the company's hotel business generated sales of only Bt157 million, a 52% decline from 2004. Profitability ratios turned negative in 2005. The investment in Tamarind Village provides only slight diversification benefits to PRK's hotel portfolio; however, the investment resulted in higher debt. At the end of December 2005, PRK's leverage slightly decreased to 50.05% from 50.31% at the end of December 2004. The ratio is not expected to improve significantly during the next few years, said TRIS Rating. -- End
Premier Resort Krabi Co., Ltd. (PRK)
Issue Rating:
PRK081A: Bt850 million senior secured debentures due 2008 Affirmed at "BB+"
Rating Outlook: Changed to "Stable" from "Negative"
The "stable" outlook is based on the expectation that PRK will restore its operating performance back to normal and will be able to maintain its competitiveness. If PRK aggressively invests in other new businesses or assets that further weaken its financial profile, the rating or outlook may be revised.
TRIS Rating reported that PRK was founded in 1990 and has operated a 104-room high-end resort hotel, Rayavadee, in Krabi since 1993. The company's current shareholders are the Phongsathorn and Osathanugrah families (50.9%), Premier Fission Capital Co., Ltd. (22.8%), and Sea Harrier Co., Ltd. (26.3%). In May 2005, PRK increased its capital from Bt262 million to Bt329 million by issuing 6.67 million preferred shares to the Tsunami Recovery Fund. Rayavadee is in a unique and remarkable area on Pra Nang peninsula in Krabi, and is surrounded by towering limestone cliffs and beaches of three national parks. The hotel is managed by PRK's in-house management team, including new top managers who joined the hotel at the end of 2004 and have extensive experience in operating hotels in international markets.
In 2005, Rayavadee's performance was weak due mainly to the impact of the December 2004 tsunami. Revenue per available room (RevPar) dropped to Bt2,248 per night in 2005 from the range of Bt4,700 to Bt5,800 per night during the previous five years due mainly to a significant drop in occupancy rate (OR). The hotel's OR decreased to 15.9% in 2005 from 31.1% in 2004, while its average room rate (ARR) declined to Bt14,118 per night in 2005 from Bt18,371 per night in 2004. To diversify its sources of income, in April 2005, Raya Heritage Co., Ltd., 99.4% owned by PRK, bought Tamarind Village, a 40-room boutique hotel in Chiang Mai. The company plans to upgrade the hotel to be a luxury hotel. Though Tamarind Village is expected to make a full-year contribution in 2006, the contribution will be insignificant.
As Rayavadee contributes most of PRK's cash flow, the sharp decline in occupancy rate significantly impairs the company's financial profile. In 2005, the company's hotel business generated sales of only Bt157 million, a 52% decline from 2004. Profitability ratios turned negative in 2005. The investment in Tamarind Village provides only slight diversification benefits to PRK's hotel portfolio; however, the investment resulted in higher debt. At the end of December 2005, PRK's leverage slightly decreased to 50.05% from 50.31% at the end of December 2004. The ratio is not expected to improve significantly during the next few years, said TRIS Rating. -- End
Premier Resort Krabi Co., Ltd. (PRK)
Issue Rating:
PRK081A: Bt850 million senior secured debentures due 2008 Affirmed at "BB+"
Rating Outlook: Changed to "Stable" from "Negative"