TRIS Rating Co., Ltd. has assigned the rating of “AA-” to the proposed issue of Bt6,000 million in senior debentures for Banpu PLC (BANPU). At the same time, TRIS Rating has affirmed the company rating and the ratings of BANPU’s existing debentures at “AA-” with “stable” outlook. The ratings reflect the company’s strong financial profile, leading position in the regional coal market, as well as a reliable stream of dividend income from the power business. The fluctuations in coal prices and prolonged global economic slowdown which could hinder the recovery of demand for energy remain rating concerns.
The “stable” outlook reflects TRIS Rating’s expectation that BANPU will implement a more conservative business policy and be able to maintain a strong financial position. The current slowdown in coal demand and prices will be partly mitigated by existing contracts with a diverse set of customers. A reliable stream of dividends from the power business will provide some cushion for the company amidst a more challenging business environment.
TRIS Rating reported that BANPU is one of the major energy companies in Asia. It was established in 1983 to mine coal in Thailand. The company has continuously expanded and now has coal operations in Indonesia and China. The firm simultaneously increased its investment in the power business in Thailand and China. During the last three years, the coal business accounted for approximately 73% of earnings before interest, tax, depreciation and amortization (EBITDA); the remaining 27% was from the power business. In terms of country diversification, approximately 74% of total EBITDA of Bt18,772 million in 2008 was from Indonesian operation; 26% was from China.
TRIS Rating said, coal production across BANPU and affiliated companies in 2008 totaled 18.1 million tonnes, excluding operations in China. The majority was from coal mines in Indonesia. Production of 17.7 million tonnes in 2008 made BANPU the fourth largest coal producer in Indonesia, with 7% share in terms of total production. Despite the current decline in the price of coal, the company’s coal operations for 2009 are expected to stay healthy because approximately 70% of coal sales in 2009 have already been fixed at favorable prices. As of December 2008, the investments of BANPU in the power business were worth Bt12,205 million, of which 73% was in Thailand and 27% in China. BANPU’s power portfolio in Thailand comprises a 50% stake in BLCP Power Ltd. (BLCP), and a 14.99% holding in Ratchaburi Electricity Generating Holding PLC (RATCH). For 2008 operations, the company recognized Bt4,118 million in dividends from its power portfolio.
As of December 2008, BANPU’s total debt was Bt29,074 million and the total debt to capitalization ratio was healthy at 39%. The proceed from the proposed debentures will be used to repay maturing debt and to smooth out the debt repayment schedule. BANPU plans to invest approximately US$208 million in 2009 and is scheduled to repay borrowings of Bt4,000-Bt5,000 million per year during 2010-2011. These capital needs will be mostly funded by EBITDA of approximately Bt10,000-Bt13,000 million per year. The net debt to capitalization ratio is expected to remain below BANPU’s stated policy level of 50% in the medium term, said TRIS Rating. -- End
Company Rating: Affirmed at AA- Issue Ratings: BP109A: Bt2,000 million senior debentures due 2010 Affirmed at AA- BP10NA: Bt1,500 million senior debentures due 2010 Affirmed at AA- BP10NB: Bt1,000 million senior debentures due 2010 Affirmed at AA- BP111A: Bt1,500 million senior debentures due 2011 Affirmed at AA- BP15NA: Bt2,500 million senior debentures due 2015 Affirmed at AA- Bt6,000 million senior debentures due within 2016 AA- Rating Outlook: Stable
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