TRIS Rating Co., Ltd. has assigned a “A” rating for Glow Energy PLC’s (GLOW) proposed up to Bt6,000 million guaranteed debentures. At the same time, TRIS Rating has affirmed the company rating and the ratings of GLOW’s outstanding debentures at “A”. The rating outlook remains “stable”. The ratings reflect GLOW’s stable cash flow from long-term Power Purchase Agreements (PPAs) with the Electricity Generating Authority of Thailand (EGAT) and long-term contracts with a diverse group of industrial customers (ICs). Moreover, GLOW has a proven record of providing reliable electricity and other utilities to customers, and receives strong support from its major shareholder, SUEZ Group. The ratings also take into consideration GLOW’s expansion and acquisition plans for the next four years, including developing a new Independent Power Producer (IPP) the company was awarded and developing its cogeneration business.
The “stable” outlook reflects GLOW’s reliable cash flow from its long-term PPAs and contracts with EGAT and ICs. TRIS Rating expects GLOW to maintain its financial target to ensure the sufficient liquidity, especially during the peak leverage used to finance its expansion plan.
TRIS Rating reported that GLOW was founded in 1993 as an energy company. GLOW’s business currently comprises four companies operating under Small Power Producer (SPP) scheme and one company operating under the IPP scheme in Thailand. GLOW Group is considered as the largest SPP Group in Thailand with installed capacity of 995 megawatts (MW) of electricity and 967 tonnes per hour (tph) of steam. Glow IPP Co., Ltd. (GIPP), the GLOW subsidiary responsible for its IPP business, operates a 713 MW combined cycle power plant. The GLOW Group’s total electricity generating capacity is 1,708 MW, 76% of which has been contracted to EGAT under 21-25 year PPAs. The remaining electricity, together with steam and treated water, are supplied to ICs under sales contracts which, in service, have remaining tenors of up to 14 years. Those long-term commitments provide GLOW with stable revenue. In 2007, electricity sales accounted for 86% of GLOW’s total sales, with EGAT and ICs contributing 70% and 30% of electricity sales, respectively.
GLOW’s SPP businesses, which are located in Map Ta Phut Industrial Estate (MIE) and Eastern Seaboard Industrial Estate (ESIE) in Rayong province, mainly cater to petrochemical plants which require highly stable utility supplies. GLOW cogeneration facilities comprise 20 electrical generators that have been interconnected to provide ICs with reliable supplies of electricity and steam. With the interconnection system, GLOW has the flexibility to have all units back each other up in order to maintain high and stable availability and reliability.
TRIS Rating said the SUEZ Group has maintained a 69% holding in GLOW since GLOW re-listed on the Stock Exchange of Thailand (SET) in April 2005. SUEZ is an international industrial and service group whose core activities are energy and environment services. At the end of 2007, SUEZ’s total power capacity in operation was 55,269 MW. In 2007, the SUEZ Group reported ?47,475 million in revenue, of which the energy business contributed 74.7%. GLOW is part of SUEZ Energy International (SEI) which is the SUEZ business line responsible for the company’s energy activities outside Europe. The SUEZ Group has been active in GLOW’s operation, providing GLOW with experienced management teams and technical support.
In 2007, GLOW’s operating performance was satisfactory with equivalent availability factors (EAF) of 95.87% for its SPPs and 94.61% for GIPP. Both businesses have forced outages of less than 1%. In addition, the average heat rate of GLOW’s SPPs and IPP in 2007 improved slightly from 2006. GLOW’s sales in 2007 declined by 1% year-on-year (y-o-y) mainly as a result of stronger baht, which resulted in the decrease of average power price for both the SPP and IPP businesses. SPP sales volume increased by 2.84% in 2007 y-o-y, but sales revenue increased by only 1%. While GIPP’s sales volume declined by 2.87% due to a 34-day shutdown for inspection and blade repair, the sales value declined by 5.07%. As a result, operating income as a percentage of sales declined from 27.01% in 2006 to 26.05% in 2007. GLOW’s total debt to capitalization ratio improved from 45.92% in 2006 to 41.39% in 2007, mainly due to the repayment of long-term debt on schedule, which also improved the company’s liquidity. Despite a 6% decline in funds from operations (FFO), GLOW’s FFO to total debt improved slightly from 34.20% in 2006 to 35.26% in 2007. Earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage ratio also increased from 7.04 times in 2006 to 7.74 times in 2007. However, GLOW’s financial profile is expected to weaken in the medium term due to a substantial increase in leverage to finance the company’s expansion plan which GLOW plans to raise fund of approximately Bt33,000 million during the next four years. -- End
Glow Energy PLC (GLOW)
Company Rating: Affirmed at A
Issue Ratings:
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
GLOW175A: Bt2,000 million guaranteed debentures due 2017 Affirmed at A
Up to Bt6,000 million guaranteed debentures due within 2018 A
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken
The “stable” outlook reflects GLOW’s reliable cash flow from its long-term PPAs and contracts with EGAT and ICs. TRIS Rating expects GLOW to maintain its financial target to ensure the sufficient liquidity, especially during the peak leverage used to finance its expansion plan.
TRIS Rating reported that GLOW was founded in 1993 as an energy company. GLOW’s business currently comprises four companies operating under Small Power Producer (SPP) scheme and one company operating under the IPP scheme in Thailand. GLOW Group is considered as the largest SPP Group in Thailand with installed capacity of 995 megawatts (MW) of electricity and 967 tonnes per hour (tph) of steam. Glow IPP Co., Ltd. (GIPP), the GLOW subsidiary responsible for its IPP business, operates a 713 MW combined cycle power plant. The GLOW Group’s total electricity generating capacity is 1,708 MW, 76% of which has been contracted to EGAT under 21-25 year PPAs. The remaining electricity, together with steam and treated water, are supplied to ICs under sales contracts which, in service, have remaining tenors of up to 14 years. Those long-term commitments provide GLOW with stable revenue. In 2007, electricity sales accounted for 86% of GLOW’s total sales, with EGAT and ICs contributing 70% and 30% of electricity sales, respectively.
GLOW’s SPP businesses, which are located in Map Ta Phut Industrial Estate (MIE) and Eastern Seaboard Industrial Estate (ESIE) in Rayong province, mainly cater to petrochemical plants which require highly stable utility supplies. GLOW cogeneration facilities comprise 20 electrical generators that have been interconnected to provide ICs with reliable supplies of electricity and steam. With the interconnection system, GLOW has the flexibility to have all units back each other up in order to maintain high and stable availability and reliability.
TRIS Rating said the SUEZ Group has maintained a 69% holding in GLOW since GLOW re-listed on the Stock Exchange of Thailand (SET) in April 2005. SUEZ is an international industrial and service group whose core activities are energy and environment services. At the end of 2007, SUEZ’s total power capacity in operation was 55,269 MW. In 2007, the SUEZ Group reported ?47,475 million in revenue, of which the energy business contributed 74.7%. GLOW is part of SUEZ Energy International (SEI) which is the SUEZ business line responsible for the company’s energy activities outside Europe. The SUEZ Group has been active in GLOW’s operation, providing GLOW with experienced management teams and technical support.
In 2007, GLOW’s operating performance was satisfactory with equivalent availability factors (EAF) of 95.87% for its SPPs and 94.61% for GIPP. Both businesses have forced outages of less than 1%. In addition, the average heat rate of GLOW’s SPPs and IPP in 2007 improved slightly from 2006. GLOW’s sales in 2007 declined by 1% year-on-year (y-o-y) mainly as a result of stronger baht, which resulted in the decrease of average power price for both the SPP and IPP businesses. SPP sales volume increased by 2.84% in 2007 y-o-y, but sales revenue increased by only 1%. While GIPP’s sales volume declined by 2.87% due to a 34-day shutdown for inspection and blade repair, the sales value declined by 5.07%. As a result, operating income as a percentage of sales declined from 27.01% in 2006 to 26.05% in 2007. GLOW’s total debt to capitalization ratio improved from 45.92% in 2006 to 41.39% in 2007, mainly due to the repayment of long-term debt on schedule, which also improved the company’s liquidity. Despite a 6% decline in funds from operations (FFO), GLOW’s FFO to total debt improved slightly from 34.20% in 2006 to 35.26% in 2007. Earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage ratio also increased from 7.04 times in 2006 to 7.74 times in 2007. However, GLOW’s financial profile is expected to weaken in the medium term due to a substantial increase in leverage to finance the company’s expansion plan which GLOW plans to raise fund of approximately Bt33,000 million during the next four years. -- End
Glow Energy PLC (GLOW)
Company Rating: Affirmed at A
Issue Ratings:
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
GLOW175A: Bt2,000 million guaranteed debentures due 2017 Affirmed at A
Up to Bt6,000 million guaranteed debentures due within 2018 A
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken