TRIS Rating Co., Ltd. has upgraded the company rating of Glow Energy PLC (GLOW) (formerly named Glow SPP PLC) and the ratings of its guaranteed debentures to “A” from “A-” with “stable” outlook. The ratings reflect GLOW’s stable cash flow from long-term Power Purchase Agreements (PPAs) with Electricity Generating Authority of Thailand (EGAT), its proven record of providing reliable electricity and other utilities to customers, and the support from its major shareholder, Suez-Tractebel Energy Holdings Cooperatieve U.A. (STEH). The ratings also take into consideration power plant operation risk
and uncertainty about the ongoing deregulation of the power industry.
While the “stable” outlook reflects GLOW’s reliable cash flow from its long-term PPAs
with EGAT and industrial customers (ICs). GLOW is expected to maintain its strong financial profile and
ability to finance growth without weakening its financial position. Despite frequent organization structure changes within the group, the company is expected to maintain its strong operational performance and
its competitive edge in Map Ta Phut area. The upcoming restructuring of its major shareholder, Suez, should have no immediate impact on GLOW’s operations.
TRIS Rating reported that the GLOW Group comprises four small power producers (SPPs) and one independent power producer (IPP) with total electricity generating capacity of 1,709 megawatts (MW). It is
considered the largest SPP group in Thailand with total installed capacity of 996 MW electricity
and 968 tonnes per hour (t/h) steam. According to the SPP and IPP schemes, GLOW sells electricity
to EGAT under 21-25 year PPAs and supplies electricity, steam and treated water to ICs in
the Map Ta Phut Industrial Estate (MIE) under long-term supply agreements that average 10-15 years,
which provides GLOW with stable revenue. In 2005, the company generated 62% of its revenue
from EGAT and 38% from ICs, while revenue from electricity sales accounted for 85% of total revenue.
TRIS Rating said, GLOW’s SPP businesses, mainly cater to petrochemical plants in MIE and Eastern Seaboard Industrial Estate (ESIE). Its cogeneration facilities consist of 20 electrical generators which
have interconnection to provide ICs with reliable supplies of electricity and steam. The various plants
partially back each others up and the steam network could substantially reduce the risk of supply
interruption and pressure loss in the event that any one unit fails. These factors have allowed the
cogeneration facilities to maintain high reliability rates. After GLOW listed on the Stock Exchange of
Thailand (SET) in April 2005, the Suez Group (Suez) diluted its holding from 99% to 69%. Suez is
an international industrial and services group that is active in energy and environmental businesses.
With a strong presence in its markets, Suez has total power capacity of approximately 56,000 MW
and 2005 revenues of EUR41.5 billion. Suez remains as a major shareholder in GLOW and has
provided well-experienced management teams and technical support.
In 2005, GLOW’s operating performance was satisfactory. GLOW achieved its equivalent
availability factor (EAF) for SPPs at 95.7% and forced outages were as low as 0.4%. The EAF of Glow
IPP Co., Ltd. (GIPP), the only IPP unit of GLOW, was 83.7%, a decline from 96.7% in 2004, due
to major scheduled maintenance and a forced outage of 5.2%. GLOW’s financial performance in 2005
improved substantially from the previous year due to the doubling of its power generating capacity
after the acquisition of Glow Co., Ltd. (GlowCo) in December 2004, which added Glow SPP1 Co.,
Ltd. (GSPP1) and GIPP into its portfolio. As a result, GLOW’s sales in 2005 increased 80% over 2004,
with net income from operations increasing by 57% to Bt4,314 million. Operating income as a
percentage of sales decreased slightly to 29.1% from 29.4%, mainly due to rising fuel prices. GLOW’s
liquidity is sufficiently strong to fund the expansion Phase 4 from operating cash flow. — End
Glow Energy PLC (GLOW)
Company Rating: Upgraded to “A” from “A-”
Issue Ratings:
GLOW089A: Bt6,500 million guaranteed debentures due 2008 Upgraded to “A” from “A-”
GLOW09OA: Bt2,310 million guaranteed debentures due 2009 Upgraded to “A” from “A-”
GLOW10DA: Bt3,490 million guaranteed debentures due 2010 Upgraded to “A” from “A-”
Rating Outlook: Stable