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Rescheduling, bond issue among choices
YUTHANA PRAIWAN
Thai Tap Water Supply Plc, the country's largest private tap water producer, is considering two options to restructure its 10-billion-baht long-term debt to ease financial costs.
The company said it could either reschedule debt payments or raise funds for refinancing by issuing debentures.
Managing director Sompodh Sripoom said the company had to pay 600 million baht in interest annually on its debt at present.
TTW, a subsidiary of the country's second-largest construction firm, Ch. Karnchang, said the debt financed its investment in a water pipeline network in 2000 and the purchase of shares in subsidiary Pathum Thani Water (PTW) last year.
Approximately 6.5 billion baht of the total debt is borne by TTW itself while the remainder was used by PTW for investment.
''The interest cost is quite high. Our performance should be better than this. Despite a relatively low debt-to-equity ratio of 0.8 times, we are thinking about debt restructuring,'' he said.
The company is seeking appropriate financial instruments even though its 1.4-billion-baht cash in hand is considerably sound. Its major creditors are Bangkok Bank, Siam Commercial Bank, TMB Bank and Krung Thai Bank.
Since the company's loans are due to be repaid over the next five years, it may choose to negotiate for the rescheduling of its debt repayments with creditors. Failing that, it might issue debentures to refinance the debt.
TTW recently hired Tris Rating to conduct a rating to be used in the debt restructuring.
''We have to make the decision in the third quarter since we need to proceed with another investment project,'' Mr Sompodh said.
TTW has a 1.3-billion-baht investment project in the pipeline to expand its capacity by 100,000 cubic metres per day to a total of 422,000 cubic metres in order to meet its capacity reserve target of 20,000 cubic metres.
Currently, demand for tap water in the company's service area _ Samut Sakhon and parts of Nakhon Pathom _ is 300,000 cubic metres a day and its reserve meets the target. However, given the steadily rising demand, the company foresees reserves possibly falling short of the target in the next few years.
TTW is seeking licence approval for its expansion project from the Provincial Waterworks Authority (PWA). Once it gets the green light, construction will begin which will take at least 18 months.
TTW is also considering increasing the selling price of its water to the PWA by 9% to reflect the actual production cost. Any price revision is normally based on the consumer price index.
This year, TTW expects to see its consolidated revenue rise by 17% to 3.6 billion baht from 3.25 billion baht a year earlier. Its first-half revenue rose 75.2% year-on-year to 1.73 billion baht. Net profit jumped 36% to 615.61 million baht. Its second-quarter net profit was 307.6 million baht, up from 229.9 million a year earlier.
TTW shares closed yesterday on the SET at 4.88 baht, unchanged, in trade worth 36.8 million baht.
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